Early-Pay Discount Calculator
A take-or-hold calculator for supplier early-pay discounts.
It measures the APR-style annualised return of the discount vs your cost of capital.
Use it to decide when paying early beats holding cash for the full net terms.
Signal Lab · Model
Early-Pay Discount Calculator
An early-pay discount is a % off for paying before net terms. Compare the APR-style annualised return to your cost of capital (the hurdle rate / opportunity cost of cash) — take or hold.
Illustrative AU AP (accounts payable) invoice until you enter actuals. Not financial advice.
Invoice terms and cost of capital
Classic 2/10 net 30 style. Persist locally · Jump to decision
Take or hold
APR-style annualised return vs cost of capital. Traffic light on the decision.
Equations
- DaysSaved = NetDays − DiscountDays
- AnnReturn (APR-style annualised return) = (d ÷ (1 − d)) × (365 ÷ DaysSaved) · d = DiscountPct ÷ 100
- Saving = Invoice × d · Take if AnnReturn ≥ CostOfCapital
- Pay early = Invoice × (1 − d) · residual = Cash − early pay (if take) else Cash
How this is calculated
- Early-pay discount — % off the invoice if paid within discount days instead of waiting until net days
- APR-style annualised return = (d / (1 − d)) × (365 / DaysSaved), where d is the discount as a decimal — comparable to an annual interest rate
- Take when APR-style annualised return ≥ your cost of capital (hurdle rate); otherwise Hold cash until net
- Optional cash residual: after take you pay Invoice × (1 − d); after hold residual is unchanged
Illustrative AP decision aid — not financial advice.
What-if dials
Discount % and cost of capital — live Take / Hold.
Discount & capital
Dials override the form values for the what-if readout. Invoice and days stay fixed.
Take it with you
Download a prompt, export the Excel workbook, or email yourself.
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