Is the cash discount worth it?
Enter invoice amount, discount rate, discount period and net payment term — the calculator shows the discount amount, net payment and the implied annual rate.
Invoice & discount
Gross invoice amount from the supplier bill
Typically 2 % or 3 % for early payment
Days within which paying earns the discount (e.g. 10)
Days until full payment is due (e.g. 30)
Benchmark rate
Your overdraft or investment rate as a benchmark (default 10 %)
- Discount amount
- €20.00
- Net payment
- €980.00
- Implied annual rate
- 36.73 %
- Verdict
- Take the discount — worth it
The implied annual rate of the discount is higher than your alternative rate. Paying early is cheaper than using the cash elsewhere.
Note: The implied annual rate uses the commercial 360-day method: (rate / (100 − rate)) × (360 / (net term − discount period)) × 100. If this exceeds your alternative rate, taking the discount is the cheaper option.
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