Calculate invoice due dates and early payment discount deadlines.
Taking a two per cent discount twenty days early annualises to roughly 37 per cent, which almost always exceeds the cost of capital. That is why early payment discounts are usually worth taking. For the supplier the same arithmetic runs in reverse: offering 2/10 net 30 is expensive financing compared with most borrowing.
Invoice Due Date
Annualised discount = discount ÷ (100 − discount) × 365 ÷ days saved
Annualised discount = discount ÷ (100 − discount) × 365 ÷ days saved Taking a two per cent discount twenty days early annualises to roughly 37 per cent, which almost always exceeds the cost of capital. That is why early payment discounts are usually worth taking.
For the supplier the same arithmetic runs in reverse: offering 2/10 net 30 is expensive financing compared with most borrowing.
This calculator takes 5 inputs: Invoice amount, Payment term, Early payment discount, Discount window, Days since the invoice date. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.