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Tax & Discounts

Early Payment Discount Calculator

See the deadlines, savings and true annual return of an early-payment discount like 2/10 net 30.

Result

Pay by (to get the discount)

—

Net due date

—

Discounted amount

$980.00

Amount saved

$20.00

Annualized return of paying early

37.24%

Verdict

Take the discount — it beats your cost of capital.

Embed this calculator on your site

Copy this code and paste it into your page's HTML. The calculator is free to use and resizes itself to fit.

How it's calculated

Annualized return = discount ÷ (100 − discount) × 365 ÷ (net days − discount days). For 2/10 net 30 that is about 37% a year. If it beats your cost of capital, paying early is the better deal.

This calculator shows what an early payment discount is worth. Enter the invoice date, the amount and the terms. It returns the discount deadline, the net due date, the amount to pay, your saving and the annualized return.

The formula

discounted amount = invoice x (1 - discount %)
saved             = invoice - discounted amount
annualized rate   = discount / (100 - discount)
                    x 365 / (net days - discount days) x 100
discount deadline = invoice date + discount days
net due date      = invoice date + net days

The verdict is "Take the discount" when the annualized rate is higher than your cost of capital.

Worked example

Invoice date 2026-03-02, amount $1,000, terms 2/10 net 30. Your cost of capital is 10% a year.

  • Pay by: 2026-03-12
  • Net due date: 2026-04-01
  • Discounted amount: $980.00
  • Amount saved: $20.00
  • Annualized return: 37.24%
  • Verdict: take the discount

The math is (2 / 98) x (365 / 20) x 100 = 37.24%.

How to read the result

Paying 20 days early saves 2.04% of the amount you pay. Spread over a year, that rate is very high. A discount is almost always better than a short-term loan or a credit card.

Skip the discount if your cash is tight or if your cost of capital is higher than the annualized return. Then pay on the net due date.

The longer the net period, the lower the annualized return. The shorter the gap between the two dates, the higher it gets.

Sellers should read the same figure as their cost of buying faster cash.

Write the deadline as a date on your invoice. See the payment terms guide for how to choose terms.

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Frequently asked questions

What does 2/10 net 30 mean?
The buyer gets a 2 percent discount if they pay within 10 days of the invoice date. Otherwise the full amount is due within 30 days.
Is a 2/10 net 30 discount worth taking?
Usually yes. It equals an annual return of about 37 percent, which beats most borrowing costs. Compare it with your own cost of capital in the calculator.
How is the annualized return calculated?
Divide the discount by 100 minus the discount. Multiply by 365 divided by the days saved, which is net days minus discount days. Multiply by 100 for a percentage.
Should a seller offer an early payment discount?
It speeds up cash, but it costs margin. Offer it only if the faster cash is worth more to you than the discount. Test the numbers with this calculator first.
Where do I write the terms on an invoice?
Put them in the payment terms or notes, for example 2/10 net 30. Add the discount deadline as a date so there is no doubt.