My supplier gives 2% off if I pay the invoice within 10 days; how much do I actually save?
You save 2% of the invoice. On a 12,500 invoice that is 250, so you pay 12,250 instead of the full amount. The maths is simple; the real question is whether that sum is worth paying ahead of time, and that depends on your cash position.
Work out the amount, not the rate
2% sounds small, but what it is worth depends on the size of the invoice. So always turn it into money first, because the decision is made in dirhams or riyals, not in percent.
Invoice of 12,500 at 2% off: a saving of 250, and 12,250 to pay.
Invoice of 3,000 on the same terms: a saving of 60, and 2,940 to pay.
- Open the Discount calculator and type the invoice amount.
- Type 2 as the discount and pick the invoice currency from the currency list.
- Read the saving and the amount to transfer if you pay early, and copy the result to send to whoever approves payments.
Is paying early worth it?
The calculator does not decide this for you, but it gives you the number to decide with. The discount is the price of paying a few weeks sooner. If the cash is sitting there with nothing else to do in that period, the saving is a clear gain. If paying early means delaying rent or salaries, or borrowing, weigh the saving against what that would cost.
A practical way to think about it: 250 saved for handing over 12,500 ahead of schedule. Is there anything you could do with that money in those weeks that would bring back more than 250? If not, pay early.
If you are the seller offering these terms
- Work out what you will give up on your larger invoices before announcing the terms; it is what you pay for getting cash in sooner.
- State the terms plainly in the payment details field of the Basic invoice generator, for example: 2% off if paid within 10 days of the invoice date.
- When a customer pays early, issue the receipt for the discounted amount so it matches what arrived in your account.
If you are the buyer
Agree with the supplier upfront how the discount is taken: from the invoice total including tax, or from the amount before tax? The calculator takes the rate from whatever figure you enter, so enter the one you agreed. You can also record the agreed terms in the notes of your order in the Purchase-order generator so nobody forgets them.
Common questions
Does the calculator keep my invoice amounts?
No. The calculation runs in your browser and nothing is sent, so you can type real figures without worrying.
The supplier offers 2% within 10 days or 1% within 20 days. How do I compare?
Work out each rate on the invoice amount to see the saving in each case, then decide based on the day you can actually pay.