What is the type of discount that is awarded for paying an invoice before the cash discount period ends?

The type of discount awarded for paying an invoice before the cash discount period ends is known as the Anticipation discount. This discount incentivizes early payment, allowing the buyer to reduce the overall cost of the purchase if they settle their account within a specified timeframe.

In many business transactions, suppliers offer this discount as a means to improve cash flow and reduce outstanding receivables. When a buyer pays their invoice early, they are essentially anticipating the payment due date and taking advantage of the opportunity to save money.

Other options, such as Advance Payment Discount, Early Payment Discount, and Immediate Payment Discount, may seem related but do not specifically capture the term typically used in accounting and finance for discounts tied to early payments. Anticipation is the term that best reflects the nature of allowing a customer to benefit from paying their bill ahead of time in the given context.