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

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.

Your numbers

Invoice amount

Discount percentage

BC field Discount % on the payment terms.

Discount period

days

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

Net payment period

30 days

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

Your cost of funds

% per year

Your results

Annualised return of taking the discount

37.2%

Net gain from taking the discount

$152

Discount amount

$200

Amount payable if taken

$9,800

Financing cost of paying early

$48

Return minus cost of funds

28.2%

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

Save results:

Annualised discount return vs net days

Sweeps Net payment period from 15 to 90, holding your other inputs fixed.

Find discounts you are missing

Optional: we can scan vendor ledger entries for early payment discounts and show the missed value.

Optional. The tool and every export work without this. No spam.

How to use it

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

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.

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

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

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.

Frequently Asked Questions

Where do I set this up in Business Central?

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?

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?

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?

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.

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.

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