Payment terms · Suppliers
2/10 net 30: what skipping the discount costs a year.
Enter the invoice, the discount and the two deadlines. You get the amount you would pay early and the annual rate you pay if you wait for the net date.
Annual cost = discount / (1 - discount) x 365 / (net days - discount days). For 2/10 net 30 that is 2.0408% x 18.25 = 37.24% a year (44.59% compounded). On a $10,000 invoice you pay $9,800.00 on day 10 or $10,000.00 on day 30.
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Result
The price of waiting twenty days
The terms 2/10 net 30 read like a small courtesy, two percent off. They are in fact an offer to lend you money at a price. Pay on day 10 and you keep two percent; pay on day 30 and you have effectively borrowed the discounted amount for 20 days, at a cost that works out to well over 30% a year. Whether that is worth declining depends on what your own money costs, which is why this page asks for it.
The same arithmetic works for any terms, such as 1/15 net 45 or 3/10 net 60. If you are the one waiting to be paid, the days sales outstanding calculator shows how long your customers actually take, and the net 30 due date calculator gives the exact deadline dates.
Worked example
A $10,000 invoice on terms of 2/10 net 30. Paying inside 10 days costs $10,000 x 0.98 = $9,800.00; the discount is $200.00. If you wait to day 30 you pay $10,000.00, so the extra $200.00 buys you 20 more days with $9,800.00.
- Cost for the 20-day period: 200 / 9,800 = 2.0408%.
- Periods per year: 365 / 20 = 18.25.
- Simple annual rate: 2.0408% x 18.25 = 37.24%.
- Compounded: 1.020408 to the power 18.25, minus 1 = 44.59%.
If your cost of funds is 8% a year, paying $9,800.00 ten days sooner than the 20-day window costs about $9,800.00 x 8% x 20 / 365 = $42.96 in interest, so taking the discount nets $157.04. The 8% is an example input.
How it is calculated
Cost per period = discount / (1 - discount), because the discount is earned on the full invoice but you hold back only the discounted amount. Periods per year = days in year / (net days - discount days). Simple annual rate = cost per period x periods per year; compounded rate = (1 + cost per period) ^ periods - 1. The formula is derived arithmetic: none of the pages opened for this tool (below) states an annualised figure, so check it against your own finance team's convention, particularly the 365 versus 360 day year.
What the terms mean comes from the sources: a discount of 2% if payment is received within 10 days, otherwise payment in full within 30 days. Wikipedia notes the 2% discount can be taken only if payment is received in full within 10 days of the date of the invoice.
What this does not cover
- Late-payment penalties if you pay after the net date. See the late fee and interest calculator.
- Tax treatment of discounts taken, which depends on your jurisdiction and accounting policy.
- Whether your supplier actually honours the discount on partial payments or disputed invoices.
- Supplier risk. Paying earlier means your cash is exposed for longer if the goods turn out to be faulty.
Sources
Opened and read on 2026-10-26 (figures and wording as of that date):
- 2/10 Net 30, Corporate Finance Institute: a trade credit that gives a 2% discount if payment is received within 10 days; the $10,000 x 0.98 = $9,800 example.
- Payment terms, Wikipedia: "2% 10, net 30" and the 2% discount being available only if payment is received within 10 days of the invoice date.
- 5 CFR 1315.7, Cornell Legal Information Institute: for US federal agencies, the discount period is calculated from the date placed on the vendor's proper invoice, and a discount is taken only if economically justified.
Common mix-ups
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Often assumedThe discount days and the net days both count from the same date.
What the source saysFor US federal agencies the discount period is calculated from the date placed on the vendor's proper invoice (5 CFR 1315.7(d)), while the 30-day payment period in 5 CFR 1315.4 starts on receipt of a proper invoice. In private contracts the start date is whatever the agreement says, so confirm it. [1]
Checked against these sources on .
Frequently asked questions
What does 2/10 net 30 mean?
A 2% discount if you pay within 10 days; otherwise the full amount is due within 30 days. Wikipedia counts the 10 days from the date of the invoice for the discount.
Is it worth taking a 2/10 net 30 discount?
Usually yes if you can pay without borrowing at a high rate. The discount is equal to roughly 37% a year (simple) on the 20 days you give up, so it beats most credit lines and savings rates. Enter your own cost of funds above to check.
How is the annual rate worked out?
Discount / (1 - discount) is the cost for the 20-day period, and 365 / 20 = 18.25 such periods fit in a year. The product is 37.24% simple, or 44.59% compounded.
Why 365 or 360 days?
Different finance teams use different year lengths. A 360-day year gives 18 periods instead of 18.25 for 2/10 net 30, so the annual rate comes out slightly lower. Pick whichever your business uses.
Does this work for terms like 1/10 net 30 or 3/15 net 45?
Yes. Change the discount percentage and the two day counts. The net days must be later than the discount days.
Disclaimer
A planning calculation from the numbers you enter, not accounting, legal or financial advice. Check the terms in your own contract or quote. Everything runs in your browser and nothing you enter is sent or stored.