Purchasing & working capital
Borrowing vs Supplier Discount Calculator
Compare paying an invoice in full at its net due date with borrowing the discounted amount to pay early. Include the financing rate, day count and one total financing fee.
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INPUT GROUP 01
Supplier terms
Days run from the same invoice date; the net due day must be later than the discount deadline.
INPUT GROUP 02
Financing assumption
Use the same currency and an entered simple annual rate, not an inferred APR.
Check the assumptions before acting on a result.
Read the method and exampleYOUR CALCULATION
Financing the early payment costs less than paying the full invoice at the net due date.
Discounted invoice to finance
Financing gap (days)
Simple financing interest
Early payment plus financing
Saving versus net-date payment
Continuous break-even annual rate
Before interest cent rounding; not a legal APR calculation.
Two payment choices for the same invoice
| Choice | Supplier payment | Interest | Financing fee | Total cost |
|---|---|---|---|---|
| Pay at net due date | $10,000.00 | $0.00 | $0.00 | $10,000.00 |
| Finance early payment | $9,800.00 | $64.44 | $0.00 | $9,864.44 |
Illustrative inputs loaded. Replace them with your own assumptions.
How the borrowing vs supplier discount calculator works
This compares two buyer payment choices for one invoice. Paying at the net due date costs the full invoice. For the early option, the buyer borrows the discounted invoice at the discount deadline and repays that principal at the net due date. The financing period is net day minus discount day; both days use the same invoice-date origin.
Discount = invoice × discount percentage. Early payment = invoice − discount. Simple interest = early payment × annual rate ÷ 100 × financing days ÷ day basis. Early total = early payment + interest + the one financing fee. Net saving = full invoice − early total. Invoice and fee round to cents first, then discount and interest each round half-up separately.
The continuous break-even annual rate is 100 × (discount − fee) ÷ early payment × day basis ÷ financing days. It is unavailable when the fee exceeds the discount or no balance remains to finance. Because interest is charged in cents, this unrounded rate is a comparison aid rather than an exact final-cent borrowing limit.
Confirm the supplier accepts the stated discount and which costs qualify. This model excludes compounding, installment repayments, taxes, loan availability, collection timing and the value of keeping cash available. It does not calculate legal APR or select a lender. The numerical defaults illustrate terms, not a financing offer.
Worked example
A $10,000 invoice offers 2% by day 10 instead of full payment on day 30. The discount is $200 and $9,800 is financed for 20 days. At a simple 12% annual rate on a 365-day basis, interest is $64.44. With no financing fee, early payment plus borrowing costs $9,864.44, saving $135.56 versus paying $10,000 on day 30.
Sources and assumptions
The source material explains the underlying calculation or pricing structure. Entered prices, costs, schedules and scenario choices are your assumptions; this tool does not obtain supplier quotes or predict actual results.
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