Early Payment Discount Return Calculator

Suppliers may offer a discount for early or cash payment (e.g. "2/10 net 30": 2% off if paid within 10 days, otherwise net in 30). The discount looks small, but annualised it is often above the cost of bank borrowing. This tool computes its annual simple return and, by comparing it with your alternative cost of funds, shows in TRY what paying early earns you.

Formulas

• Discount = Invoice × Discount rate / 100
• Amount paid = Invoice − Discount
• Annual simple return (%) = Discount / Amount paid × 365 / Days × 100
• Net benefit = Discount − Amount paid × Alternative rate × Days / 36,500

Amounts are rounded to 2 decimals, half up (HALF_UP). The invoice amount must be greater than zero; "Days" is the difference in days between the discounted payment date and the normal due date. If the alternative rate is left at 0, the net benefit equals the discount amount.

Example 1: TRY 10,000 invoice, 2% discount, paid 30 days early. Discount TRY 200, amount paid TRY 9,800. Annual return = 200 / 9,800 × 365 / 30 × 100 ≈ 24.83%. If your alternative cost is 36% a year, the 30-day cost of TRY 9,800 is about 289.97, so the net benefit is −89.97: paying early does not pay.

Example 2: TRY 500 invoice, 1% discount, paid 10 days early. Discount TRY 5.00, amount paid TRY 495.00, annual simple return 36.87%.

How to read the result: The annual simple return is what you earn by paying early; compare it with your alternative cost of funds, such as a loan rate or deposit yield. If the return is higher than the alternative cost, paying early generally pays; the net benefit output shows this in TRY, and if it is negative, paying early does not pay. For the seller the same rate is the annual financing cost of bringing collection forward. Liquidity, FX and the supplier relationship are not taken into account.