Invoice Early-Payment Discount Rate Calculator

Method and assumptions

Days saved = net days − early-payment days. Discount dollars = invoice × discount rate. The simple annualized implied cost is d ÷ (1−d) × 365 ÷ days saved. The compounded annual equivalent is (1 ÷ (1−d))^(365 ÷ days saved) − 1. These are comparisons of the discount choice, not a lender quote.

Worked example

A 2% discount on $10,000 saves $200 and pays $9,800 early. Paying on day 10 instead of day 30 gives up 20 days of cash use: the simple annualized rate is about 37.24%, and the compounded annual equivalent is about 44.59%.

How to use the result

Compare the implied rates with your own available cash uses and financing costs, including liquidity needs. The day-count basis is 365 days; fees, compounding terms in an actual loan, and supplier-specific conditions are not modeled.

Input meanings and limits

• Invoice amount: The invoice face amount before the discount.
• Discount for early payment: The percentage reduction if paid early.
• Regular net-payment day: Payment due day measured from the same invoice date.
• Discount-payment day: Must be earlier than the net-payment day.

Inputs accept finite, nonnegative values in the displayed ranges; percentages are bounded to 0–100% (with 99.99% maximum where division by the remaining share is used), and whole-unit or month fields require integers. Currency figures are shown in USD for convenience; enter values in one consistent currency. This is a planning worksheet, not financial, legal, tax, or accounting advice.

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