From this system of cash discounts, arose a custom widely indulged in by buyers, who, preferring not to take advantage of the discount period offered them by sellers, deduct their discount in any event, notwithstanding the fact that they overran the period of credit granted them. On account of close competition in trade, sellers are often inclined to permit this practice, thus allowing the buyer to gain an unfair advantage over them.

The consequence of a system as above described tends to increase prices inasmuch as it is then necessary for the seller to figure the selling price high enough to cover the loss arising from this improper deduction. Again, from an apparent advantage to the buyer, there arises a disadvantage, for he still believes that he is obtaining a large discount and so discounts his obligation, not figuring that the process renders it altogether more costly to him on account of the increased price of merchandise.

Another inconvenience arising from the cash discount system is that many buyers are unable to acquire cash on the moment to take advantage of discount opportunities and to make separate loans for the purpose of discounting each bill as it comes in. The cost of the merchandise, therefore, to the smaller buyer is much more than to the one who is able to take advantage of the cash discount. The smaller buyer, therefore, must seek higher prices for his goods, making the process of selling for him much more difficult, which deprives him of the fullest benefits.