The term "cash sale" can be used in several different contexts. In just about every situation, a sale of this type has to do with the purchase of goods or services, and involves the immediate possession of the new owner, without any amount of time between purchase and assuming full ownership. People engage in cash sales on a daily basis, both in the world of finance and in retail situations.
One of the more common applications of the term has to do with investments. Within this context, a cash sale is a financial transaction that is completed on the actual trade date, rather than taking place after the usual three day period involved in most types of settlements. This type of sale allows the new owner to take immediate possession free and clear. This arrangement allows the investor to retain or sell the security immediately, without having to wait any amount of time.
In the event that the sale takes place late in the business day, the transaction can still be considered a cash sale and treated as if the actual purchase day and the trade date are the same. Generally, there will be no difference as long as the transaction takes place before 2:30 p.m. Eastern Standard Time. However, a cash sale conducted after that time will be completed and recorded for the following business day, and still be able to avoid the necessity of the three day settlement period.
In the case of purchases for the office or the home, cash sales are transactions that are immediately processed by the use of cash or a check. There is no situation of a deferred payment for the products that are purchased. Liquid assets are used to pay for the products in full, allowing the buyer to take immediate possession. The cash sale in this application could be the outright purchase of office equipment, a new television or computer for the home, or any other tangible item that is purchased for general use in the space.
