Calculate the true cost of trade credit and whether early payment discounts are worth taking. Compare 2/10 Net 30, Net 60, and other B2B payment terms.
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Frequently Asked Questions
What does "2/10 Net 30" mean?
2/10 Net 30 means: you get a 2% discount if you pay within 10 days, otherwise the full amount is due in 30 days. The "2" is the discount percentage, "10" is the discount window (days), and "30" is the net payment deadline. This is the most common trade credit term globally, including in African B2B trade.
When should I take the early payment discount?
Take the early payment discount when the implied APR of the trade credit exceeds your bank borrowing rate. For example, 2/10 Net 30 implies ~37% APR — almost always worth taking if your borrowing rate is under 25%. In high-inflation African markets where borrowing costs are 20-35%, most early payment discounts are worth taking.
What is supply chain finance?
Supply chain finance (SCF) or reverse factoring allows buyers to use their strong credit rating to help suppliers get early payment at a lower rate. The bank pays the supplier early (at a discount close to the buyer's rate), and the buyer repays the bank on the original due date. Popular in South Africa, Nigeria, and Kenya through banks like Standard Bank, FirstRand, and Ecobank.