Early Payment Discount Simulator

Calculate the net amount and benefit of paying before the due date.

Debt or invoice amount

Advance discount (%)

Days paid early

Annual opportunity rate (%)

When paying early is worthwhile

Paying early is worthwhile when the discount exceeds the opportunity cost of money. The decision depends on the discount rate, time period, and return available elsewhere.

A small discount may not compensate if the money could earn more elsewhere.
Longer periods may increase savings, but they also require more available cash.
The decision also depends on the liquidity of the individual or business.

Practical tip: Before paying early, compare the discount savings with the return the same cash could generate in another application or emergency reserve.