Early Payment Discount Calculator
Compare an invoice discount with the cash and extra payment days given up when paying early.
Invoice savingExample$200.00
- Early payment amount
- $9,800
- Simple annualized saving rate
- 37.24%
How to calculate early payment discount
Saving = invoice × discount; simple annualized saving rate = discount ÷ (1 − discount) × 365 ÷ (normal days − early days)
Assumes a single invoice discount and a 365-day year. This simple annualized comparison does not compound or account for liquidity needs, tax or supplier disputes.
Worked example
An illustrative scenario. “Reset to example” restores it in the calculator.
- Invoice amount before discount
- $10,000
- Early payment discount
- 2%
- Discount payment deadline
- 10 days
- Full payment deadline
- 30 days
Invoice saving: $200.00
Early Payment Discount FAQ
Does a high annualized rate mean I should always pay early?
No. Compare the saving with your funding cost and cash reserve needs. The annualized rate describes the short payment interval; it is not an investment return guarantee.