Difference between cash discount or Trade Discount?

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Cash discount is a reduction in the amount payable by a customer for paying in cash, while trade discount is a reduction in the list price of a product offered to a customer.

Cash discount is given to encourage prompt payment and is usually a percentage of the total invoice amount.
Trade discount is given to wholesalers or retailers and is deducted from the list price before the customer pays.
Cash discount is recorded as a reduction in accounts receivable, while trade discount is not recorded in the books.
Example of cash discount: A customer receives a 2% discount if they pay the invoice within 10 days.
Example of trade discount: A retailer receives a 20% trade discount on the list price of a product.

Difference between cash discount or Trade Discount?

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