2/10 Net 30 Explained
"2/10 net 30" is a common trade credit term meaning: - 2% discount if the invoice is paid within 10 days - Full amount due within 30 days if the discount isn't taken
It appears on invoices as "2/10 N30."
The Real Cost of Skipping the Discount
Passing on a 2/10 net 30 discount is equivalent to borrowing money at 37.2% APR:
You're effectively paying 2% to keep the money for 20 extra days. That's extremely expensive financing.
When to Pass on the Discount
The only rational reason to pass on an early payment discount is if your cost of capital is lower than the annualized discount cost — and that's rarely the case for 2/10 net 30.
If you genuinely can't pay early because of cash constraints, that's a working capital problem to solve separately. Consider a revolving credit facility: borrowing at 8% to take a 37% annualized discount opportunity is clearly worthwhile.
Use the Invoice Discount Calculator to compute the annualized cost for any discount terms.