What are Cash Sales?

Cash sales are sales in which the payment obligation of the buyer is settled at once. Cash sales are considered to include bills, coins, checks, credit cards, and money orders as forms of payment.

The term can also refer to the sale of a security that requires immediate delivery.

Advantages of Cash Sales

A key advantage of a cash sale is that it eliminates the need for the seller to extend credit to a customer. Therefore, there is no risk of a bad debt. Without any bad debt expense, the seller can theoretically lower its prices and still generate a profit, which allows it to increase its market share by pricing lower than the competition.