You are working as a summer intern at a rapidly growing organic food distributor. Part of your responsibility is to assist in the accounts payable department. You notice that most bills from suppliers are not paid within the discount period. The manager of accounts payable says the bills are organized by vendor, like the accounts payable ledger, and she is too busy to keep track of the discount periods. Besides, the owner has told her that the 1% and 2% discounts available are not worth worrying about.

Write a memo to the owner explaining why it is expensive not to take advantage of cash discounts on credit purchases. In addition, suggest a way to file (organize) supplier invoices so that they are paid within the discount period.