# Business Central Payment Discount Calculator (2/10 Net 30)

> Source: https://netray.co/tools/business-central-payment-discount-cost-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Decide whether taking an early payment discount beats your cost of borrowing, and get the values for Payment Terms Code setup.

## Category

cost-finance

## Erp

Dynamics 365 Business Central

## Audience

- AP manager
- Treasury
- Finance manager
- BC consultant

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Invoice amount

**Key:** invoice

**Type:** number

**Default:** 10000

**Min:** 0

**Step:** 100

**Unit:** $

#### Discount percentage

**Key:** disc_pct

**Type:** number

**Default:** 2

**Min:** 0

**Max:** 50

**Step:** 0.5

**Unit:** %

**Help:** BC field Discount % on the payment terms.

#### Discount period

**Key:** disc_days

**Type:** number

**Default:** 10

**Min:** 0

**Step:** 1

**Unit:** days

**Help:** Basis of the Discount Date Calculation, for example 10D.

#### Net payment period

**Key:** net_days

**Type:** slider

**Default:** 30

**Min:** 15

**Max:** 120

**Step:** 1

**Unit:** days

**Help:** Basis of the Due Date Calculation, for example 30D.

#### Your cost of funds

**Key:** borrow

**Type:** number

**Default:** 9

**Min:** 0

**Max:** 50

**Step:** 0.5

**Unit:** % per year

**Outputs:**

#### Discount amount

**Key:** disc_amt

**Expr:** invoice * disc_pct / 100

**Format:** currency

#### Amount payable if taken

**Key:** pay_early

**Expr:** invoice - disc_amt

**Format:** currency

#### Annualised return of taking the discount

**Key:** effective

**Expr:** disc_pct / (100 - disc_pct) * 365 / max(net_days - disc_days, 1) * 100

**Format:** percent

**Primary:** true

#### Financing cost of paying early

**Key:** finance_cost

**Expr:** pay_early * borrow / 100 * (net_days - disc_days) / 365

**Format:** currency

#### Net gain from taking the discount

**Key:** net_gain

**Expr:** disc_amt - finance_cost

**Format:** currency

**Primary:** true

#### Return minus cost of funds

**Key:** spread

**Expr:** effective - borrow

**Format:** percent

**Chart:**

#### Annualised discount return vs net days

**Type:** line

**X:** net_days

**From:** 15

**To:** 90

**Steps:** 30

**Series:**

- effective

**Disclaimer:** Simple interest approximation on a 365 day year. Ignores tax effects, VAT adjustments, currency and any payment grace period configured in General Ledger Setup.

## Content

**Intro:** Terms like 2/10 net 30 look small but are often worth more than 35 percent a year. This calculator turns a discount percentage and a payment period into an annualised rate you can compare with your cost of borrowing, then tells you the net gain in money.

**Sections:**

#### How to use it

**Body:** Enter the invoice amount, the discount percentage, the days within which it applies and the net due days. Add your cost of funds, which is your overdraft or credit line rate. If the annualised return is higher, pay early and take the discount. If cash is plentiful and earns little, the discount is almost always worth taking.

#### The formula

**Body:** The annualised return equals discount divided by one minus discount, multiplied by 365 over the number of days you give up by paying early. For 2/10 net 30 that is 2 over 98, times 365 over 20, roughly 37 percent. The financing cost is the early payment amount, times your rate, times the days brought forward over 365. Net gain is discount minus financing cost.

**Bullets:**

- Payment Terms Code: Due Date Calculation, Discount Date Calculation, Discount %
- Payment Discount Grace Period in General Ledger Setup
- Pmt. Disc. Tolerance and Payment Tolerance settings
- Adjust for Payment Disc. controls how VAT is corrected

#### Reading the chart

**Body:** The chart shows how the annualised return falls as net days increase for a fixed discount period. Longer terms spread the same discount over more days, so the return drops quickly. This helps you negotiate: a supplier who offers 1 percent for payment in 10 days on net 60 terms is giving you a much smaller annualised return than 2/10 net 30.

#### Common mistakes

**Body:** Mixing up the discount period and the net period, forgetting that a discount may be taken on net invoice value excluding VAT, and leaving payment discounts off the vendor card so the suggestions in the payment journal miss them. In BC the vendor payment terms drive the date and amount that Suggest Vendor Payments uses.

**Cta:** If you want the AP team to see, for every open invoice, which discounts are worth taking this week, we can build a read-only report from your vendor ledger entries.

**Faq:**

#### Where do I set this up in Business Central?

**Answer:** Search for Payment Terms. For each code set the Due Date Calculation, Discount Date Calculation and Discount %. Then assign the code to vendors and customers, and it flows to documents.

#### Is the annualised figure compounded?

**Answer:** No. It is a simple annual rate. Compounding would increase the apparent return, so the simple figure is the conservative comparison.

#### What does the grace period do?

**Answer:** The Payment Discount Grace Period in General Ledger Setup extends the number of days after the discount date in which a discount can still be granted, which helps with bank processing delay.

#### Does this work for customers too?

**Answer:** Yes. From a seller's view the discount is a cost of getting cash early. Compare the annualised cost with your own borrowing rate to decide whether to offer it.

## Search terms

business central payment terms discount, payment discount percent business central, 2/10 net 30 calculator, early payment discount annualized rate, business central payment discount date, business central payment terms setup

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