Early Payment Discounts - Sweeten the Deal?

Bushel Baskets, Inc. (BBI) is having a cash flow problem. The company just sent an invoice to Adam's Apple Orchards (AAO) for $500. Normally, payment would be due in 30 days. Should BBI offer AAO a discount for paying the bill in 10 days?

On the Plus Side

If AAO takes advantage of the discount, the speedy payment can help ease BBI's cash crunch. A discount might also encourage habitual slow-paying customers to pay sooner.

Analysis Needed

If BBI's cost of credit -- the amount BBI would have to pay to borrow money -- is less than the discount, BBI would be better off with a short-term loan. Offering a discount is also not wise if BBI operates on a very slim margin.