# SAP B1 Early Payment Discount Calculator (2/10 Net 30)

> Source: https://netray.co/tools/sap-b1-early-payment-discount-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

See the implied annual return of taking a supplier's early payment discount and compare it with your cost of capital before setting payment terms.

## Category

sap

## Erp

SAP Business One

## Industry

Discrete Manufacturing

## Audience

- Accounts payable
- Controller
- Buyer

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Invoice amount

**Key:** invoice

**Type:** number

**Default:** 50000

**Min:** 0

**Step:** 500

**Unit:** $

#### Early payment discount

**Key:** disc

**Type:** number

**Default:** 2

**Min:** 0

**Max:** 20

**Step:** 0.25

**Unit:** %

#### Discount period

**Key:** disc_days

**Type:** number

**Default:** 10

**Min:** 1

**Step:** 1

**Unit:** days

#### Net due days

**Key:** net_days

**Type:** slider

**Default:** 30

**Min:** 15

**Max:** 120

**Step:** 5

**Unit:** days

#### Your annual cost of capital

**Key:** coc

**Type:** number

**Default:** 9

**Min:** 0

**Max:** 50

**Step:** 0.5

**Unit:** %

**Help:** Borrowing rate on your credit line or your target return on cash.

**Outputs:**

#### Discount value

**Key:** disc_amt

**Expr:** invoice * disc / 100

**Format:** currency

#### Amount paid if you take it

**Key:** pay_early

**Expr:** invoice - disc_amt

**Format:** currency

#### Days of credit given up

**Key:** extra_days

**Expr:** max(net_days - disc_days, 1)

**Format:** days

#### Annualized return of taking discount

**Key:** annual

**Expr:** if(lt(disc,100), disc / (100 - disc) * 365 / extra_days * 100, 0)

**Format:** percent

**Primary:** true

**Description:** Simple annualization: discount / (100 minus discount) x 365 / days of credit given up.

#### Cost of paying early (interest on cash)

**Key:** carry

**Expr:** pay_early * coc / 100 * extra_days / 365

**Format:** currency

#### Net benefit of taking the discount

**Key:** benefit

**Expr:** disc_amt - carry

**Format:** currency

**Primary:** true

**Chart:**

#### Annualized return versus net due days

**Type:** line

**X:** net_days

**From:** 15

**To:** 120

**Steps:** 25

**Series:**

- annual

**Disclaimer:** Simple interest approximation. Ignores tax effects and supplier relationship considerations.

## Content

**Intro:** A 2 percent discount for paying ten days early sounds small, but it is worth well over 30 percent annualized. This calculator quantifies it against your cost of capital so accounts payable can decide which supplier terms to take and which to ignore.

**Sections:**

#### How to use it

**Body:** Enter the invoice amount, the discount offered, the discount period and the final due date. Add your annual cost of capital, either the rate on your credit line or the return you earn on cash. The tool tells you the implied annual return and the money gained or lost by paying early.

#### The formula

**Body:** Annualized return = discount / (100 minus discount) x 365 / (net days minus discount days). For 2/10 net 30 that is 2 / 98 x 365 / 20, about 37 percent. Net benefit = discount value minus the interest you forgo or pay on the cash for the extra days. Anything where the annualized return beats your cost of capital is worth taking.

**Bullets:**

- Longer net terms raise the annualized return
- Smaller periods of credit given up raise it too
- Compare it with your actual marginal funding cost

#### Using it with SAP Business One

**Body:** SAP Business One payment terms can carry a cash discount percentage and discount days, and the payment run or incoming and outgoing payment screens can apply it when you pay within the window. Use this tool to decide which suppliers deserve those terms set up and which payment runs should be timed to catch them.

#### Common mistakes

**Body:** Comparing the discount to a monthly rate instead of an annual one, ignoring that paying early on all invoices needs working capital, taking discounts after the window closes, and stretching payment so far that suppliers retaliate with price or availability. Treat the output as one input, not the whole answer.

**Cta:** If you want payment timing optimised from your open payables in SAP Business One, Netray can help. This calculator works without any contact.

**Faq:**

#### Is 2/10 net 30 always worth taking?

**Answer:** If your cost of capital is below roughly 35 percent, yes in pure financial terms. The constraint is usually cash availability, not the rate. If you must borrow at high rates or cash is tight, reevaluate.

#### How do I read terms like 1/15 net 45?

**Answer:** It means a 1 percent discount if paid within 15 days, otherwise the full amount is due in 45 days. Enter 1 for discount, 15 for discount days and 45 for net days.

#### Does it consider compounding?

**Answer:** No, it uses simple annualization, which is the convention in textbooks and supplier terms analysis. The effective compounded rate is higher, so the decision rarely changes.

#### Can suppliers cut my discount unilaterally?

**Answer:** Discounts apply under agreed terms. Taking one after the window closes is a dispute risk and creates reconciliation noise, so align payment runs to the cut-off dates.

## Search terms

early payment discount calculator, 2/10 net 30 annualized return, sap business one payment terms, cash discount cost of capital, sap b1 payment terms and cash discount, should i take early payment discount, payment terms calculator, sap b1 accounts payable discount

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