The method
How it is worked out
Annualised = discount ÷ (100 − discount) × 365 ÷ (full days − early days)
- 2/10 net 30
- The classic terms: 2% off if paid in 10 days, else full in 30
Early Payment Discount Calculator
See the annualised return on paying an invoice early for a discount, and whether it beats your cost of money. The result updates as you type so you can compare scenarios quickly.
Keep in mind
What it leaves out
- Supplier riskPaying early concentrates exposure if the supplier fails before delivery.
- Cash bufferDo not take a discount that empties the account before payroll.
Use the calculator to compare scenarios rather than as a guaranteed forecast.
About the Early Payment Discount Calculator
Decide whether to pay a supplier early for a discount by turning terms like 2/10 net 30 into an annual return.
How it works and an example to tryShow less
How to use the result
The discount is divided by what you pay and scaled to a year by the days brought forward. Financing cost is what your cash would otherwise earn or cost over those days.
Example to try
A 2% discount for paying 20 days early is a 37% annualised return. Against a 9% overdraft, paying early on a £20,000 invoice nets about £300.
Put it to work
Try it on a real situation
Load an example
What moves the result most
Worked out from your figures above. Tap a row to try it.
Who uses it, and when
Finance teams, owner-managers and bookkeepers handling supplier terms.
Mistakes worth avoiding
- Taking discounts that leave the account empty before payroll.
- Comparing the 2% with an annual rate as if they were the same thing.
- Ignoring supplier failure risk when paying long before delivery.
Questions
What does the Early Payment Discount Calculator do?
See the annualised return on paying an invoice early for a discount, and whether it beats your cost of money.
How should I use the result?
The discount is divided by what you pay and scaled to a year by the days brought forward. Financing cost is what your cash would otherwise earn or cost over those days.
Does TechBullion store the information I enter?
The core calculation or transformation runs in your browser. Normal website security and analytics may still record page-level events, but the tool does not need to create a public record from your inputs.
What mistakes do people make with an early payment discount calculator?
Taking discounts that leave the account empty before payroll. Comparing the 2% with an annual rate as if they were the same thing. Ignoring supplier failure risk when paying long before delivery.
Is the result guaranteed?
No. Use the result as a practical check or planning aid and verify important decisions with the relevant primary source, provider or professional advice.
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Results are estimates based on the figures entered, for general information only, and not financial, investment, tax or legal advice. See our terms of use.