Skonti

Skonti is the plural form of skonto, a term used in accounting and commerce to denote cash discounts offered by a seller to a buyer for paying an invoice within a specified period. Skonti are designed to encourage early payment and improve cash flow, while the buyer gains a lower effective price if the discount is taken.

Typical terms specify a discount percentage and a time window, such as 2% off if payment is made within 10 days, with the net amount due within 30 days. If the buyer pays within the window, the discount is deducted from the invoice total.

Accounting treatment: When a discount is taken, it is often recorded as a reduction in revenue through a sales discounts or cash discounts contra account. For example, an invoice for 1,000 with a 2% skonto: if paid in the discount period, the company records Dr Cash 980; Dr Sales Discounts 20; Cr Accounts Receivable 1,000. If the discount is not taken, the full amount is collected and no discounts are recognized.

Regional usage and etymology: The term is common in German-speaking and some Central and Eastern European markets; skonto is used in German and Polish, with skonti referring to multiple instances. The term traces to the word for discount (Italian sconto) via Germanic languages.

Relation to other discounts: Skonti are distinct from trade or quantity discounts offered at the point of sale; they specifically reward timely payment. Businesses weigh the benefit of faster cash against the reduction in revenue and potential administrative costs.