Early Payment Discount Calculator
Compare an invoice discount with the annualized cost of giving up extra payment days.
Your result
FINANCIALEnter your values and select calculate.
On this page How it works & practical examples
How to use the Early Payment Discount Calculator
Enter the discount as a percentage of the same invoice and measure both deadlines from the same invoice date. The percentage translates the extra amount paid into a simple annualized financing comparison.
The calculation
Worked example
A 2% discount paid on day 10 instead of day 30 implies a 37.2449% simple annualized cost of declining the discount; the discounted bill is $980.
Assumptions and limits
Uses a 365-day year and simple annualization, not an effective annual return. It excludes credit availability, tax treatment, penalties and contract exceptions.
Common questions
Which inputs should I use?
Enter the discount as a percentage of the same invoice and measure both deadlines from the same invoice date. The percentage translates the extra amount paid into a simple annualized financing comparison.
What does the result exclude?
Uses a 365-day year and simple annualization, not an effective annual return. It excludes credit availability, tax treatment, penalties and contract exceptions.