Small-business finance
Supplier early payment discount
Compare the effective annual cost of declining a supplier discount.
Your inputs
Complete the fields for your selected method. Zero means intentionally zero, not unknown. Currency selection labels amounts; it does not convert exchange rates.
How this calculation works
EAR=(1+discount/(1-discount))^(365/(net days-discount days))-1.
365-day year; compound equivalent rate, not simple annualization. Assumes repeating identical credit intervals. This is arithmetic, not a loan quote or supplier sourcing workflow.
What information do I need?
Use records for the same job, equipment or accounting period. Only the fields for your selected entry method are required. An unknown amount is not zero.
Input definitions and where to find them
- Supplier early-payment discount (%): Actual count from job, sales, production or service records for supplier early-payment discount. Future counts are explicit assumptions; do not infer demand.
- Discount payment day (days): Days from the same invoice reference date to discounted payment.
- Full-price payment day (days): Days from that reference date to full-price payment; no eligibility interpretation.
Use the Where to find this value controls beside the inputs for available work-it-out helpers. Estimates remain your assumptions; a helper does not verify the source figures.
Worked example
Example amounts use US dollars (USD).
Example answer: Effective annual cost of declining discount is 44.59 % for the illustrative inputs below.
Example inputs
- Supplier early-payment discount: 2.00 %
- Discount payment day: 10.00 days
- Full-price payment day: 30.00 days
- Effective annual cost of declining discount
- 44.59 %
- Cost over additional credit period
- 2.04 %
These illustrative values are not recommended rates or industry averages. Replace every example input with your own figures.
Use the result well
Compare the effective annual cost of declining a supplier discount.
Keep inputs on the same scope and time basis. Calculations retain precision internally; displayed values generally round to two decimal places, with extra precision for very small values and whole-unit rounding where required. Economic comparisons describe your supplied assumptions and do not guarantee future results.
This tool provides business arithmetic. It does not approve engineering designs, establish legal or tax treatment, select equipment or certify safe operating conditions.