Early Payment Discount APR Calculator

About this calculator

A trade credit term like “2/10 net 30” offers a 2% discount if an invoice is paid within 10 days, versus the full amount due at 30 days — which means skipping the discount is effectively borrowing the invoice amount for an extra 20 days at a cost of 2%. This calculator annualizes that cost with the standard formula: APR = (discount% ÷ (100% − discount%)) × (365 ÷ (full days − discount days)), which for 2/10 net 30 works out to roughly 37% — a strikingly high effective interest rate for what looks like a small discount.

Accounts-payable managers, small-business owners deciding whether to use a line of credit to pay early, and finance students use this calculation because trade-credit terms are common across nearly every supplier relationship, and the annualized cost of missing a discount is very often far higher than the interest rate on a business loan or credit line — making early payment the financially smarter choice whenever cash is available.