Rigorous Counts: Characteristics, Situations In Which It Is Used and Examples

A purchase or sale to counted rigorous it is a payment term whose amount is covered immediately after the operation is performed; that is, the merchandise is delivered simultaneously to your payment or even the payment is made in advance before delivery.

The strict or strict count means that the payment of a service or product is instantaneous, immediate, what is popularly known as"thundering and raining","giving and giving", etc. It is the opposite of sale or purchase on credit, where the money is paid in an agreed period after having received the purchased merchandise.

In the wholesale or retail business, different forms of payment are used. If it has been agreed that the payment is made upon receipt of the goods, it is said that the treatment was strictly counted. Under these conditions, the seller usually grants a discount, calculated on the total amount of the invoice, or on the total of the purchase.

characteristics

- It is the ideal option for any provider, although unfortunately few customers accept it due to their financial situation or little availability of cash in banks or banks.

- Help protect the supplier of customer orders that are not very clear about their financial numbers.

- It is the simplest form in terms of administration, avoiding everything related to collections.

- Although it is more common to use the rigorous cash in transactions of a small economic value, there are no impediments to make transactions with items that have high prices.

- The final sale price can be improved by offering discounts for the prompt payment made.

- With the rigorous cash never lose money, because there is no risk that the customer does not pay.

- The transaction is posted directly to the cash or bank account, instead of counting it first as a bridge in accounts receivable.

- In the commercial environment there is what is called commercial trading. In commercial cash payment contracts, the seller grants the buyer a maximum period of 10-15 days -counted from the date of receipt of the goods- to cover the price. The seller can offer a discount for prompt payment if the buyer pays before the end of that period.

- When the payment term is greater than 10-15 business days, it is said that the purchase transaction was made on credit or term.

Strict payment modalities

Cash

It is the traditional way of immediate payment.

Check

The person who issues it establishes to the financial institution where the funds are deposited that the payment of the check is made to the person or entity indicated therein. The check can be made by phone with the bank at the time of the transaction to ensure payment.

Deposit in account

It refers to the income in the bank account of the beneficiary of an amount of money, in cash or check, made by an originator.

Wire transfer

The holder of a bank account carries out with this automated transaction a transfer of funds to the account of another holder, either in the same or a different bank, physically located in the same place or in a different one.

Credit cards

It consists of a particular contract between the issuing bank and the seller. The financial institution is obliged to pay the amounts and the merchant to accept payments with this instrument.

The seller pays a percentage to the financial institution about the amount of the sale made; On the other hand, the bank charges in the bank account associated with the buyer's card all the purchases made during the month. Although the seller is charging in cash, for the buyer his payment is extended to the bank.

Debit cards

With these cards the holder of the same ones can pay his purchases. In contrast to credit cards, the purchase amount is immediately charged to the buyer's associated account. Therefore, the condition that has sufficient balance is necessary.

Situations in which the rigorous cash is used

- In the business field, the rigorous cash is usually used when starting a business relationship with an unknown customer; it is used in the first transactions, while an eventual line of credit is evaluated.

- There are situations in a commercial relationship in which the customer may be continuously delayed in his payment or accumulate an amount of unpaid debt, exceeding the credit limit assigned by the seller; this can generate distrust on the financial solvency of the client. It is decided to use the rigorous cash for future sales to that client.

- It is also used in situations in which the selling company needs to increase its availability of cash to improve the cash flow and use it to maintain the operation, instead of having to request a bank loan.

- It is used if you want to avoid the collection process and all the expenses involved in the administration of accounts receivable: ability to evaluate, control compliance with the amounts of credit line, payments and collections.

- In highly inflationary or hyperinflationary situations it is imperative to use strict cash as a condition of payment, because money quickly loses its value. Therefore, the replacement cost of the articles increases to the same extent.

- In economic recessions, confidence in the clients' ability to pay is lost. It is very convenient to protect yourself with rigorous cash.

Examples

With this condition of payment, most transactions are carried out in commercial stores. In commerce, direct sales operations are mainly carried out, using the electronic point of sale as a tool. When the payment for the purchase becomes effective, the merchandise is delivered immediately.

You can buy or sell rigorously all types of products that are included in the commercial and service area: supermarkets, clothing stores, shoe stores, toy stores, gas stations, dry cleaners, self-washes, parcels, etc.

It is also used in restaurants and fast food establishments, and is the preferential payment condition in electronic commerce, both nationally and internationally. For example, purchases through Amazon and Ebay.

Likewise, it is used in international trade transactions, making the payment before the delivery of the merchandise, either with the first presentation of documents or against the documents when the merchandise arrives at the destination port.

References

1. Debtor (2018). Payment terms - What are the payment terms? Glossary of accounting. Taken from: debitoor.es.
2. Venmas (2018). Negotiate payment terms. Taken from: venmas.com.
3. Susana Gil (2015). Cash. Economipedia. Taken from: economipedia.com.
4. Christian Gonzáles (2014). Sell ​​cash or credit? Arellano Marketing. Taken from: arellanomarketing.com.
5. Wikipedia, the free encyclopedia (2017). Cash payment. Taken from: es.wikipedia.org.