Early Payment Discount

The most common format is '2/10 Net 30' — the buyer gets a 2% discount if they pay within 10 days; otherwise the full amount is due in 30¹. So on a $1,000 invoice, they can pay $980 immediately or $1,000 in 30 days. From the buyer's perspective, that's a 2% return in 20 days — which annualizes to about 36%. That makes it very compelling for any client with available cash. From your perspective, you've traded $20 for getting paid 20 days earlier — often worthwhile if you have operating expenses due in the meantime.

Early payment discounts work best when: you have cash flow pressure and need money faster, your clients are large companies with ample cash who respond to incentives, or you have a history of slow payments from specific clients. They're less effective with smaller clients who may not have cash on hand regardless of the discount, and may not be worth offering on very small invoices where the math doesn't justify the reduction. Consider making them available rather than automatic — let clients opt in if they choose, rather than advertising them to everyone by default.

When including an early payment discount on an Invoice, show both options clearly: 'Pay $980 by [date] (2% early payment discount) OR Pay $1,000 by [full due date].' Making the savings amount explicit — rather than just showing the notation '2/10 Net 30' — increases uptake. You can also use invoice tools that automatically calculate the discounted amount. Record early payment collections accurately in your accounting — the discount amount is typically recorded as a sales discount, which reduces Revenue in your Profit & Loss Statement report.