Payment terms comparison tool (Net30/Net60/early discount/fee) Actual cost calculation
Instantly calculate "which is better" based on the "real annual interest rate" of early payment discount (e.g. 2/10 Net30) and the cost of funds.
Payment Terms Calculator — compare 2/10 net 30, net 60, fees, and effective APR.
Quick input (shortest lead to avoid confusion)
Common settings
sample
Parallel comparison of up to 3 plans
Results (you can see the conclusion at a glance)
Cross-sectional comparison of 3 options
| Comparison items | A | B | C |
|---|
Calculation method (overview)
Payment Terms Comparison, Net30 Net60 Calculation, Early Payment Discount Displays annual interest rate under the same assumptions.
premise
- 1 year = 365 days (360 days by switching)
- Simple interest/compound interest is treated as a different display method.
- Fees reflect whether it is early/regular
Calculation formula (key points)
- Pay_e = P*(1-d) + F_e
- Pay_n = P + F_n
- Gain = Pay_n - Pay_e
- APR_simple = (Gain / Pay_e) * (B / Δt)
- APR_compound = (1 + Gain/Pay_e)^(B/Δt) - 1
- PV_e = Pay_e / (1 + r*(t_d/B)) (simple interest)
- PV_n = Pay_n / (1 + r*(t_n/B)) (simple interest)
detail
- Symbols: P=billing amount, d=discount rate, t_d=discount expiry, t_n=net days, F_e/F_n=fee, B=annualized days, r=cost of funds.
- Earlyization days Δt = t_n - t_d. If Δt<=0, the discount condition does not hold and the annual interest rate will not be calculated.
- The judgment compares APR_simple and the cost of funds r, and displays a recommendation that is consistent with the PV difference.
- The break-even cost of funds is expressed as r_break_even ≒ APR_simple.
FAQ (Frequently Asked Questions)
2/10 What is Net30?
If you pay within 10 days you will get a 2% discount, otherwise you will pay in 30 days. In this tool, enter discount rate = 2%, discount expiry = 10 days, and Net = 30 days. You can enter it automatically by entering 2/10 net 30 in the condition field.
What is the interest rate (cost of funds)?
You can enter the annual rate or daily rate manually. Enter internal financing costs, target yields on working capital, interest rates on short-term borrowings, etc. Annual conversion can be switched between 365 days and 360 days.
How to compare multiple patterns?
You can compare up to 3 plans (A/B/C) in parallel. You can compare Net30 and Net60, different discount conditions, and with/without payment fees on the same axis.
What is the real annual interest rate?
This is the annualized cost of delaying payment without taking a discount. The larger the early discount, the higher the annual interest rate.
What if there is a fee?
You can choose whether the fee will be charged for early payment or regular payment. If the fee is greater than the discount amount, you may not get a benefit even if you take the discount.
Precautions
- This tool is general calculation support and is not financial or investment advice.
- Please make the final decision in accordance with your company's accounting policies, cash flow policies, and contract conditions.
- The displayed results depend on the input values and assumptions (365/360, simple interest/compound interest, etc.). Tax and accounting procedures (consumption tax, etc.) are outside the scope of this tool.