Glossary (Continued)

Bond: A written instrument executed by a bidder or contractor (the principal) and a second party (the surety) to assure fulfillment of the principal's obligation to a third party. A performance bond normally is accompanied by a payment bond (particularly in a construction contract) and is provided after the submission of a bid bond. The performance bond secures the performance and fulfillment of all the undertakings, covenants, terms, conditions, and agreements contained in the contract. A bid bond assures that the bidder will honor its obligations under the contract
Cash Discount: A discount designed to encourage prompt payment of an account by reducing the invoice price if payment is made within a stated time period. Those who do not pay within the specified time limit must pay the gross (undiscounted) price.
Change Order: A purchaser’s written authorization to the supplier to modify or change an existing purchase order.