Invoice Luxe2/10 Net 30 Explained: Early Payment Discount
What 2/10 net 30 means on an invoice, how to calculate the discount and why it can equal an annual return of over 37%.
2/10 net 30 is a common payment term. It means: take 2% off if you pay within 10 days, otherwise pay the full amount within 30 days.
Suppliers offer it to get paid sooner. Buyers take it because the saving is bigger than it looks.
Early payment discount = invoice amount × discount %
How do you calculate the early payment discount?
An invoice for $5,000 has terms 2/10 net 30:
- Discount: 5,000 × 0.02 = $100
- Pay within 10 days: $4,900
- Pay on day 11 to 30: $5,000
Want to try it right away? Discount Calculator is free and needs no signup.
What is 2/10 net 30 worth per year?
By paying 20 days earlier, you save 2%. Over a year, that adds up to a high return:
Annual rate = discount ÷ (100 − discount) × 365 ÷ (full days − discount days)
For 2/10 net 30: 2 ÷ 98 × 365 ÷ 20 = about 37.2% a year.
Borrowing money to pay early can be worth it if the loan costs less than that.
Other common terms
| Terms | Meaning | Annual rate |
|---|---|---|
| 1/10 net 30 | 1% off in 10 days, full in 30 | about 18.4% |
| 2/10 net 30 | 2% off in 10 days, full in 30 | about 37.2% |
| 2/10 net 60 | 2% off in 10 days, full in 60 | about 14.9% |
| Net 30 | No discount, full in 30 days | none |
Should you offer it as a seller?
It makes sense if cash flow matters more to you than 2% of the invoice. Check your margin first, then add the term to the invoice clearly. See invoice payment terms for wording ideas.
Use the calculator
The discount calculator shows the amount saved and the final price. For general percentages, read how to calculate a discount percentage.
FAQ
What does 2/10 net 30 mean?
A 2% discount if you pay within 10 days, and the full amount due within 30 days.
Is an early payment discount worth taking?
Usually yes. 2/10 net 30 equals roughly 37% a year, which is more than most borrowing costs.
How do I add it to an invoice?
Write the terms on the invoice, for example "2/10 net 30", and say the discount amount and the last day to claim it.
Is this financial advice?
No. It explains the calculation. Check your own cash flow and terms.