Early Payment Discount Calculator
A 2/10 net 30 discount is worth more than 37% a year, yet most organisations capture only a fraction of them. Enter your supplier terms and how long invoices take to approve to see the annual rate of each discount and how much faster approvals would recover.
- Any terms format
- Annual rate vs. cost of capital
- Approval-time model
- No sign-up
Discounts left on the table each year
$54,407
Invoices take about 14.5 days to get paid, so only 22% of discount invoices are paid inside the window. Values are net of the cost of paying early at 8%.
- Worth capturing
- $68,113
- Captured today
- $13,705
- With 2-day approvals
- $60,025
- Extra a year
- $46,320
01Your supplier terms
Type terms as they appear on the invoice, e.g. 2/10 net 30, 1.5/15 n45 or Net 60, with the annual spend on those terms.
- $2% off if paid in 10 days, otherwise due in 3037.2% a yearTake it
- $1% off if paid in 10 days, otherwise due in 3018.4% a yearTake it
- $1.5% off if paid in 15 days, otherwise due in 4518.5% a yearTake it
- $No discount · pay in 30 days
Your borrowing rate or WACC. Discounts are worth taking when their annual rate is higher.
02How long invoices take
After the invoice date
Today
With automated approval
Days from invoice date to payment
- Today · avg 14.5 days
- Automated · avg 7.5 days
Shaded: inside the 10-day window for 2/10 net 30. Paid in time today: 16%; with automated approval: 87%.
03Term by term
| Terms | Simple rate | Effective rate | Annual spend | Discount | Cost of paying early | Net value | Paid in time today | Captured today |
|---|---|---|---|---|---|---|---|---|
| 2/10 net 30 | 37.2% | 44.6% | $3,200,000 | $64,000 | −$13,747 | $50,253 | 16% | $7,923 |
| 1/10 net 30 | 18.4% | 20.1% | $1,800,000 | $18,000 | −$7,812 | $10,188 | 16% | $1,606 |
| 1.5/15 net 45 | 18.5% | 20.2% | $900,000 | $13,500 | −$5,829 | $7,671 | 54% | $4,176 |
| Net 30 | — | — | $6,000,000 | — | — | — | — | — |
| Total | $68,113 | 22% | $13,705 | |||||
Simple rate = d/(1−d) × 365/(N−D). Effective rate compounds it. Net value subtracts the interest cost of paying N−D days early at your cost of capital. Terms below your cost of capital are skipped.
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Send the $54.4K missed-discount brief to your inbox, ready to forward.
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$46.3K a year · 7 days faster
The discount isn’t lost in treasury. It’s lost while the invoice waits for a site manager to approve it.
Bollard matches invoices to the PO and receipt automatically, sends only real exceptions for approval, and flags every invoice with a discount date so AP can pay it in time.
Method
The maths of paying early
For terms d/D net N, paying on day D instead of day N earns d on the money for N−D days. The simple annual rate is d/(1−d) × 365/(N−D); the effective rate compounds it, (1/(1−d))^(365/(N−D)) − 1.
A discount is worth taking when that rate is above your cost of capital. Net value subtracts the interest you give up by paying N−D days early.
Whether you capture it depends on timing: days for the invoice to reach AP, plus approval time, plus the wait for the next payment run, all of which have to fit inside the D-day window.
From one site to every site
Most early payment discounts are lost to slow approvals, not to cash shortages.
Bollard matches each invoice to its PO and receipt as soon as it arrives, routes only real exceptions for approval, and flags discount deadlines so AP pays inside the window, at every site.
- Automatic three-way match on arrival
- Exception-only approval routing
- Discount deadlines flagged to AP
- Captured vs. missed discounts reported by vendor
Questions
Frequently asked
What does 2/10 net 30 mean?+
The buyer can take a 2 percent discount if the invoice is paid within 10 days of the invoice date; otherwise the full amount is due in 30 days.
What is the annual rate of 2/10 net 30?+
About 37.2 percent a year as a simple rate: 2/98 × 365/20. Compounded, it is about 44.6 percent. Paying 20 days early to save 2 percent is one of the best returns available to most businesses.
When should you not take an early payment discount?+
When the annualised rate is lower than your cost of capital or borrowing rate, for example a small discount for paying 60 days early. The calculator marks those terms "below" and leaves them out of the totals.
Why do companies miss early payment discounts?+
Mostly because of time. The invoice has to reach accounts payable, be matched to the PO and receipt, be approved, often by a manager at the site, and then wait for the next payment run. If that takes longer than the discount window, the discount is lost even when the business wants it.
How is the share of invoices paid in time estimated?+
Days to payment = days for the invoice to reach AP + approval time + the wait for the next payment run. Approval time is treated as normally distributed with the average and spread you enter, and the payment-run wait as uniform across the run interval. The share paid within the discount days is the probability that the total is shorter than the window.
Is my data uploaded?+
Not unless you choose to. The calculator runs in your browser, and share links keep your inputs in the URL. The optional "Email me this brief" form is the only part that sends anything: it emails the headline figures to you and to the Bollard team.
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Calculators and document builders for organisations that buy across many sites.
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Free tools, no sign-up. Your figures are processed in your browser and are not uploaded to a server unless you ask us to email you a result. Results are estimates for planning and do not constitute financial, legal or tax advice.