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Early Payment Calculator
Is a supplier’s early payment discount worth taking? Compare the discount you keep with the cost of using cash before the normal due date.
Enter your terms
Paying early saves the discount but uses cash before the normal due date. For a $100,000 invoice, a 0.5% discount for paying on day 10 instead of day 30 saves $500. At a 10% annual cost of cash, paying early costs about $545, so wait until day 30. Change the discount to 2%: you save $2,000 against about $537 in cash cost, so take the discount.
Your result
Discount saved—
Cost of paying early—
Amount paid early—
Days cash is used early—
Break-even annual cost of cash—
How this works
- Net value = discount saved − cost of cash on the discounted payment for the days paid early.
- Cost of cash = discounted payment × annual cost of cash × days early ÷ 365.
- Use a borrowing rate for incremental debt; WACC may suit an internal investment decision. Use the rate relevant to your actual cash decision.
- Simple interest and a 365-day year; taxes, compounding, fees, and supplier-specific terms are excluded. This is an estimate in the invoice currency.