The "2" in 2/10 net 30.
The "10" in 2/10 net 30.
The "30" in 2/10 net 30.
Overdraft or credit card rate, if you would borrow to pay early.
An estimate. The decision also depends on your cash position and your relationship with the other party. A discount you cannot afford to take is not a saving.
Calculated entirely in your browser. Nothing you enter is sent anywhere.
How to use it
Enter the terms
The discount percentage, the early window, and the normal payment days.
Enter your cost of money
Your overdraft or credit card rate, if you would borrow to pay early.
Pick your side
Payer or seller. The same number means opposite things.
How the calculation works
A discount for early payment is a loan in disguise. Taking two percent off to pay twenty days sooner is the same as earning two percent over twenty days, which annualises to roughly thirty-seven percent.
The formula is the discount divided by the amount still payable, multiplied by 365 divided by the days saved. That converts a small percentage over a short window into an annual rate you can compare against anything else.
For a payer, if the annual rate beats your cost of money, take it. For a seller, the same number tells you how expensive the financing you are offering actually is.
What this calculator does not do
It does not know your cash position. A discount you cannot afford to take is not a saving, however good the rate looks.
It assumes the payment terms are real. If the customer routinely pays late anyway, the discount window is theoretical.
It does not account for the relationship. Offering a discount can be worth it to a seller purely to keep a good customer, regardless of the arithmetic.
Questions
What does 2/10 net 30 mean?
Two percent off if you pay within ten days, otherwise the full amount is due in thirty. It works out to roughly thirty-seven percent a year.
Should I always take an early discount?
If the annual rate beats what the money costs you elsewhere, yes. Standard terms almost always do, which is why payers take them.
Is offering a discount a good idea?
It depends what cash is worth to you. At thirty-seven percent annualised it is expensive financing, but cheaper than factoring.
Can I negotiate the terms?
Often, yes. A smaller discount over a longer window is frequently acceptable to both sides.
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