Suppliers and trade credit
Early payment discount calculator
Terms like 2/10 net 30, turned into the yearly rate you pay by skipping the discount, and the dollars taking it keeps.
Price the terms
Runs in your browser. Nothing you type is sent or saved.
- Taking it keeps
- $40
- Skipping it costs, yearly
- 37.2%
- If repeated all year
- 44.6%
Your borrowing costs less than skipping the discount: on these numbers, paying early saves money.
Uses a 365-day year and counts no fees. Pay by the due date either way: a late payment is what a business credit file remembers.
How to read the terms
Terms written as "2/10 net 30" mean: 2 percent off if you pay within 10 days; otherwise the full invoice is due in 30 days. Skipping the discount is the same as borrowing the discounted amount for the 20 days between the two dates, and paying the discount as the price.
The worked example
On a $2,000 invoice at 2/10 net 30, paying by day 10 keeps $40. Paying on day 30 instead costs that $40 for 20 more days of the money, which works out to 37.2% a year, or 44.6% if you made the same choice every cycle all year.
Common terms, compared
| Terms | Days you keep the money | Yearly cost, simple | If repeated all year |
|---|---|---|---|
| 1/10 net 30 | 20 | 18.4% | 20.1% |
| 2/10 net 30 | 20 | 37.2% | 44.6% |
| 2/10 net 45 | 35 | 21.3% | 23.4% |
| 2/10 net 60 | 50 | 14.9% | 15.9% |
The longer the gap between the discount date and the due date, the cheaper skipping the discount becomes.
What to do with the number
Compare it with what your money costs elsewhere. If a line of credit costs less than the yearly cost above, borrowing on the line to take the discount saves money; if the business would have to borrow at a higher rate to pay early, paying on the due date may be the better choice. Either way, pay by the due date: a late payment is what a business credit file remembers.
The calculator uses a 365-day year and ignores any fees. It runs in your browser; nothing you type is sent or saved.
Sources
How this page was made
Drafted with a language model from the sources above. Jake Lawrence read it against those sources and signed it on October 25, 2026. General information, not legal, tax or financial advice: nothing here answers one business's situation, and every lender and supplier sets its own terms. Found an error? See Corrections.