2/10 Net 30 Calculator

What Is 2/10 Net 30?

"2/10 Net 30" is shorthand for an early payment discount written directly into an invoice's payment terms. It means the buyer receives a 2% discount off the invoice total if payment is made within 10 days of the invoice date. If the buyer doesn't pay within that 10-day window, the full amount is still due within the standard 30-day term. The same shorthand pattern applies to other common variants like 1/10 Net 30 or 3/15 Net 45 — the first number is the discount percentage, the second is the discount window in days, and "Net" followed by a number is the full payment deadline.

How the Effective Annual Rate Is Calculated

The interesting thing about early payment discounts is that skipping one is usually far more expensive than it looks. Forgoing a 2% discount to hold onto your cash for an extra 20 days (the gap between day 10 and day 30) works out to a much higher annualized cost than 2%, because that 20-day period repeats roughly 18 times a year. The standard formula for the effective annual rate (EAR) is:

EAR = (discount % ÷ (100 − discount %)) × (365 ÷ (net days − discount days)) × 100

For 2/10 Net 30, that's (2 ÷ 98) × (365 ÷ 20) × 100 ≈ 37.2% per year. That's why the standard advice is to almost always take an early payment discount if you have the cash on hand — even a business credit line at 15–20% APR is cheaper financing than walking away from a 2/10 Net 30 offer.

Should You Take the Discount?

Compare the effective annual rate above to your actual cost of capital — the interest rate on your business line of credit, credit card, or other short-term borrowing. If your borrowing cost is lower than the effective rate shown, it's cheaper to borrow the cash (or use your own reserves) to pay early and capture the discount than to hold the cash and pay the full amount later. This only breaks down if cash is genuinely unavailable and no borrowing option exists — in that case, the buyer has to weigh the discount against liquidity risk elsewhere in the business.

Common Early Payment Discount Terms

These figures are illustrative reference points only — the calculator above computes the exact rate and dollar amounts for whatever terms and invoice amount you enter.

If You're the One Offering the Discount

From the seller's side, an early payment discount is a cash-flow tool, not a marketing gimmick. It's most worth offering when you're regularly waiting the full net period to get paid, when short-term borrowing (or the opportunity cost of a cash crunch) is expensive, or when a specific client has a history of paying late. Before offering one, estimate what fraction of customers will actually take it — if most invoices already get paid within your net term regardless, a discount just reduces revenue without meaningfully speeding up collections. It's also worth building the discount rate around your own cost of capital: if your effective borrowing rate is 12%, a discount with an effective annual rate above that (like 2/10 Net 30 at ~37%) is giving away more than it needs to just to get paid faster.

Discount terms should also be stated unambiguously on the invoice itself — including both dates in plain language, not just the shorthand — since buyers unfamiliar with trade-discount notation can easily miss the window and default to paying the full amount at the net date.