Early settlement discount

Answered according to Hanafi Fiqh by Muftionline.co.za

Q: Where I work, we offer the 2.5% settlement discount for all customers if they pay their account within 30 days. This is a practice followed by the business over 30 years and all major customers take this if the ones that pay by the 7th of the following month. we allow this although it is not within the period. is this 2.5% also not allowed. Also, with our holding company (foreign based), we get a 3% discount if we pay the invoices within 14 days from when goods are invoiced. if we pay after 14 days, we cannot take the discount and our credit terms intra group is 60 days. Please let us know whether the practices are allowed as I am in charge of the payments.


A: Refer to http://muftionline.co.za/node/16634

And Allah Ta’ala (الله تعالى) knows best.


Answered by:

Mufti Zakaria Makada

Checked & Approved:

Mufti Ebrahim Salejee (Isipingo Beach)