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Dynamic discounting calculator
Enter an invoice, the discount on offer and how many days early it would be paid. The calculator shows the value of the discount and the Est. Annual %.
- Value of the discount
- $1,500
- Amount paid to the supplier
- $98,500
- Est. Annual %
- 30.4%
Illustrative arithmetic only. Not a promise of savings or return, and not an APR. The parties set every discount and payment date themselves.
How the numbers are worked out
Est. Annual % =
Discount % × 365 ÷ (Days paid early − 2)
Example: a 2% discount paid 30 days early is 2% × 365 ÷ 28, about 26.1%. The value of the discount is the invoice amount multiplied by the discount, so 2% of $10,000 is $200 and the supplier receives $9,800.
Frequently asked questions
How is the Est. Annual % calculated?
Est. Annual % = discount % × 365 ÷ (days paid early − 2). A 2% discount paid 30 days early is 2% × 365 ÷ 28, about 26.1%. It is an illustrative figure derived from the discount and the timing the parties choose, not a promise of any return.
Why does the calculator subtract 2 days?
The formula allows two days for the payment to be initiated and settled after an offer is accepted, so the annualized figure reflects the days the buyer's cash is actually out earlier.
Is the Est. Annual % an APR?
No. The Est. Annual % is an illustrative comparison of a discount against the days paid early. It is not an APR and not a disclosure under any lending or commercial-financing law.
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