How it works
Period cost of foregoing discount = d/(1−d). Annualize over 365/(normal day−early day), reporting both simple and compounded equivalents.
Input definitions
- Discount for early payment (%)
- Enter the value in the labeled unit.
- Discount payment day
- Enter the value in the labeled unit.
- Normal due day
- Enter the value in the labeled unit.
A worked example
- Discount for early payment (%)
- 2
- Discount payment day
- 10
- Normal due day
- 30
Assumptions & limits
Entered-data planning worksheet. No legal, payroll, tax-filing or accounting certification.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-17. Content checked against the stated method and examples. Our verification approach.
Common questions
Is the annualized discount cost a bank APR?
No. It extrapolates one payment-term discount over a hypothetical year. Actual borrowing terms, cash needs and repeatability can differ.
How does Early-payment discount annualized cost work?
Period cost of foregoing discount = d/(1−d). Annualize over 365/(normal day−early day), reporting both simple and compounded equivalents.
What are the limits of Early-payment discount annualized cost?
Entered-data planning worksheet. No legal, payroll, tax-filing or accounting certification.