Early Payment Discount — Seller View Calculator

How the early payment discount — seller view calculator works

This page takes the seller perspective. Discount cost is invoice × discount percentage. The earlier cash receipt is the invoice less that cent-rounded discount. Accelerated days equal normal receipt day less early receipt day; the normal day must be later.

Avoided simple funding cost is discounted receipt × annual funding rate × accelerated days ÷ selected day basis. It rounds separately to cents. Seller net cost is discount granted less that avoided funding amount. The annualized comparison divides discount cost by the earlier receipt and annualizes the timing gap; it is not a legal APR or compounded return.

Actual customer behavior, collection probability, tax effects, financing fees and the value of immediate liquidity are outside this arithmetic. Enter an appropriate funding assumption and confirm the offered terms rather than interpreting the result as a recommendation to discount invoices.

Worked example

On 10,000, a 2% discount costs 200 and produces 9,800 cash on day 10 instead of day 30. At 12% simple annual funding cost and a 365-day basis, 20 earlier days avoid 64.44, so the seller net cost is 135.56. A 1% discount instead costs 100.

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.

• Tipalti: early-payment discount terms and perspectives