Free Early Payment Discount Calculator: Is 2/10 Net 30 Worth It?
See what an early payment discount such as 2/10 net 30 saves, what it costs to skip it as an annual interest rate, and whether paying early beats your borrowing or savings rate. For buyers who pay invoices and sellers who offer discounts.
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Payment terms such as "2/10 net 30" offer a discount for paying an invoice early: 2% off if you pay within 10 days, otherwise the full amount within 30 days. It sounds small, but skipping the discount is one of the most expensive ways to borrow money. This free early payment discount calculator shows what the discount saves and its equivalent annual interest rate.
Early payment discount calculator
The annual rate shows what it costs to give up the discount and pay on the last day instead: discount ÷ (100% − discount) × 365 ÷ the extra days. The days are usually counted from the invoice date.
Key takeaways
- On a $10,000 invoice with 2/10 net 30, paying by day 10 saves $200: you pay $9,800 instead of $10,000.
- Skipping the discount means paying $200 for 20 extra days of credit, the equivalent of 37.24% a year, or 44.59% with compounding.
- If you can borrow, or earn interest on your cash, at less than that rate, take the discount.
- For sellers, offering 2/10 net 30 is an expensive way to get paid faster.
What "2/10 net 30" means
| Part | Meaning |
|---|---|
| 2 | The discount: 2% of the invoice amount |
| 10 | The discount period: pay within 10 days to get it |
| Net 30 | Otherwise the full amount is due within 30 days |
The days usually run from the invoice date. Federal agencies, for example, must count the discount period from the date on a proper invoice, under the Prompt Payment rules in 5 CFR 1315.7. Some terms count from the end of the month instead, written as "2/10 EOM".
How the annual rate is calculated
If you skip the discount, you keep the money for the extra days between the end of the discount period and the due date, and you pay the discount for that privilege. The discount is charged on the reduced amount, so the cost per period is d ÷ (1 − d):
Annual rate = discount ÷ (1 − discount) × 365 ÷ (days until due − discount days)
For 2/10 net 30: 0.02 ÷ 0.98 × 365 ÷ 20 = 0.3724, or 37.24% a year. If you could repeat this every 20 days, the compounded rate would be (1 + 0.02 ÷ 0.98)365 ÷ 20 − 1 = 44.59%.
Common terms and their annual rates
| Terms | Annual rate (simple) | Compounded |
|---|---|---|
| 1/10 net 30 | 18.43% | 20.13% |
| 2/10 net 30 | 37.24% | 44.59% |
| 2/10 net 45 | 21.28% | 23.45% |
| 2/10 net 60 | 14.90% | 15.89% |
| 3/15 net 45 | 37.63% | 44.86% |
If you pay invoices: take the discount?
- You have the cash: almost always take it. Even the best high-yield savings account earns far less than a 37% annual return.
- You would need to borrow: compare the annual rate with your credit line or loan APR. Borrowing at 12% to capture a 37% discount still saves money.
- Pay on the right day: paying on day 10 gets the full discount and keeps your cash as long as possible. Paying the full amount before day 30 brings no benefit.
- Do not take a discount you did not earn: deducting the discount after the period ends shortchanges the seller unless they agree.
If you send invoices: offer a discount?
A 2/10 net 30 discount costs you the same 37% annual rate that your customers save. That can still make sense if late payments are a real problem or if you need the cash quickly, but compare it with alternatives:
- Ask for a deposit before you start, as you can do on an estimate.
- Invoice right away and make paying easy with a payment link on the invoice.
- Send a polite payment reminder as soon as an invoice is overdue.
- Charge a late fee only if your contract allows it and your state's law permits it.
If you offer a discount, write the terms clearly on the invoice, for example "2% discount if paid by October 14, 2026; otherwise the full amount is due by November 3, 2026."
Frequently asked questions
What does 2/10 net 30 mean?
The buyer can take a 2% discount by paying within 10 days. Otherwise the full invoice amount is due within 30 days.
Is a 2% early payment discount worth it?
Usually yes. Skipping it costs the equivalent of about 37% a year, far more than most savings accounts pay or most business loans cost.
How do I calculate the cost of not taking a discount?
Divide the discount by 100% minus the discount, then multiply by 365 and divide by the number of extra days you get by paying late: 2% ÷ 98% × 365 ÷ 20 = 37.24%.
Can I still take the discount if I pay late?
Only if the seller agrees. The discount is a reward for paying within the discount period; after it ends, the full amount is due.
What does net 30 mean without a discount?
The full amount is due within 30 days of the invoice date, with no discount for paying earlier.
