Ever wondered what 2/10 means on your net 30 invoice? It’s a discount formula that can also give you a Paydex score boost when paid on time.
What is 2/10 Net 30?
This is a type of discount that some Net 30 vendors give to buyers who are willing to pay their tradeline invoices off early and in full. The numbers within this formula can also change depending on the vendor’s preference and are broken down as follows:
- 2 = This discount percentage is ONLY given when the buyer pays their invoice early (2% off total)
- 10 = The timeline after invoicing when the discount applies (up to 10 days)
- Net 30 = Normal, 30 day payment terms
In this instance, the buyer will receive a 2% discount if they pay off tradeline credit in full up to 10 days after the invoice billing date.
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How to Calculate
How do you calculate 2/10 net 30? The math is quite simple with the first number (2) being the percentage discount of the invoice amount, while the second number (10) is the number of days from billing that it applies.
|PAYMENT TERMS||INVOICE AMOUNT||DISCOUNT %||DISCOUNT||AMOUNT OWED|
|Payment on day 1 through 10||$1,000||2%||-$20||$980|
|Payment on day 11 through 30||$1000||0%||$0||$1,000|
The number 30 in this formula can also be exchanged for Net 15, Net 22, or Net 60 payment terms which would change the billing due date accordingly.