Early Payments Hub

What is a 2/10 net 30 early payment discount and when does it make sense for your business to use one? Read our full guide with examples and calculations.

Dynamic discounting is an excellent tool for vendors and business customers to get paid early, save money, and build solid supplier relationships. Dynamic discounting can shorten the supplier’s cash conversion cycle by collecting accounts receivable quicker.

Net 30 vendors offer 30-day credit terms, often combined with early payment discounts like 2/10 net 30. A 2/10 net 30 payment term gives customers the option to receive a 2 percent discount when paying an invoice within 10 days or pay the full amount of the invoice for the vendor to receive a payment within 30 days. 

Net 90 credit terms for invoices included in accounts payable are important. As a customer, you’re fortunate to receive these longer payment terms from your vendors. Trade credit is favorable for customer cash flow because they have longer to pay bills.

Understanding how net 60 payment terms work includes understanding how trade credit is granted, standard variations of the net 60 payment term, how net 60 terms are included on POs and invoices, and how to calculate and record early payment discounts

Net 60 vendors are suppliers offering 60-day payment terms to their approved customers through invoices with due dates. This trade credit from net 60 vendors is interest-free financing when the suppliers receive payment from their customers within 60 calendar days.

Net 45 is a payment term used to state that an invoice must be paid within 45 days of receiving it. Sometimes, a vendor may offer early payment discount terms for paying sooner. An example is 1/10 net 45, meaning the customer pays the invoice within 10 days instead of 45 to earn a 1% discount. 

Net 30 is a common payment term for businesses selling to other businesses. It means you are giving your customers and clients 30 days, including weekends and holidays, to pay an invoice. 

Payment terms are specifications of amounts owed, how, when, and where payments are due on sales transactions between sellers and buyers. Payment terms from a contract or purchase order are included on an invoice to the customer.

A net 30 account is 30-day trade credit on invoices for business purchases, also known as a net30 tradeline or vendor tradeline. Net30 accounts offered by vendors extend credit to customers with net 30 terms. Business customers timely pay for purchases without interest charges.

Trade credit is a seller providing short-term business credit terms to a buyer (without charging interest) in a business transaction for the sale of goods or services. The supplier bills the customer using invoices to be paid within a stated number of days and records accounts receivable until receiving a cash payment. 

An early payment discount is a form of trade finance and a means for companies to obtain a discount on vendor invoices when paying early. A business pays less than the full amount due while the supplier receives payment earlier than standard payment terms.