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2/10 net 30 is a 36.5% APR decision. Buyers should almost always take it; sellers should price terms into the quote — a $50k invoice floating 60 days costs $658.
Payment terms are loans in disguise, priced in a language nobody translates. "2/10 net 30" — 2% off to pay 20 days early — is a 36.5% APR decision (43.5% compounded): the best guaranteed return on cash most businesses will ever see, which is why CFOs grab it and why sellers offer it only when their own cash costs more. The flip side prices the same way: a $50,000 invoice a customer floats to 60 days costs you $658 on an 8% credit line — a hidden 1.3% price cut that never appears in the quote. This calculator translates any terms structure into APR and dollars, from both sides of the invoice.
Business owners use it before setting invoice terms: 2/10 net 30 is a 36.5% APR decision, and a $50k invoice floating to 60 days on an 8% credit line is a hidden $658 price cut.
Almost always — the APR math is that lopsided. Taking 2/10 net 30 earns 2% for paying 20 days early: 36.5% annualized. Unless your cash costs more than that — and if your working capital is on credit cards or merchant cash advances, it might — take the discount every time. Even borrowing to take it usually wins: drawing your 8% line of credit to capture a 36% return is the cleanest arbitrage in business finance. The exceptions: when cash preservation outranks returns (a genuine liquidity crunch where the cash itself is survival), when the supplier relationship matters more than 2% and they are signaling cash stress (your early payment might buy goodwill worth more than the discount — ask), and when the discount is not actually offered on the invoice — never assume; terms are per-vendor and sometimes per-contract. Systematize it: AP automation that flags discount deadlines converts this from a decision into a capture rate, and the capture rate is a KPI — most companies leave half their available discounts unclaimed through pure process failure.
Price terms like the financing they are, then buy behavior with them. First, know your float cost: your cash cost × days outstanding ÷ 365 × invoice — at 8% on net-60, every $50,000 invoice carries $658 of financing you are giving away. Second, terms are pricing: net-60 to a slow payer versus net-30 to a fast one is a 1.3% price difference that belongs in the quote, not in collections. Third, use early-pay discounts surgically: 2/10 net 30 to customers whose float costs you more than the discount, not blanket — and note the discount is only worth offering if your cash cost exceeds theirs, or their payment behavior genuinely improves. Fourth, structure beats discount on custom or project work: deposits (30–50% on order), progress billing (milestone-tied), and retainers eliminate float instead of pricing it. Fifth, the late side: a disclosed 1.5%/month late fee (18% APR) on the original invoice is enforceable in most states and changes behavior more than collection calls — the invoice-late-fee calculator prices it. And the collections reality: a chronically late customer is not a collections problem, they are a pricing problem — their effective rate should rise until the float is paid for.
The pattern is called supply-chain squeeze: large buyers unilaterally extend to net-90 or net-120 (their procurement gets a bonus on working capital), then offer "early payment" through supply-chain finance programs — where a bank pays you on day 10 minus a discount, converting your receivable into their profit center. The small-supplier defenses, in leverage order: diversify the customer base (the customer who is 40% of your revenue owns your terms; the one who is 10% negotiates), price the terms into the quote from day one (net-90 quoted 2% higher than net-30, in writing, reframes extensions as purchases), use the early-pay discount in reverse — your 2% for day-10 payment is cheaper than factoring, invoice factoring itself at 1–3% per month when cash flow justifies it, and deposits on any custom work where you carry materials. Know the legal floor: some states and the federal Prompt Payment Act (government contracts) mandate payment timelines and interest on late payment — federal contractors must pay within 30 days of proper invoice, and state equivalents exist; an invoice citing the statute gets routed differently. And the nuclear option that is sometimes right: firing the customer — a $500,000 account at net-120 with a 5% margin can be worth less than a $200,000 account at net-30 with discipline. Run both through this calculator before the renewal.