See the annualized value of an early-payment discount (like 2/10 net 30) to decide whether it's worth taking.
Invoice terms like "2/10 net 30" mean you get a 2% discount if you pay within 10 days, or the full amount is due in 30 days. Skipping the discount is effectively like taking a loan at a surprisingly high annualized rate.
Annualized Rate = (Discount % ÷ (100% - Discount %)) × (365 ÷ (Full Term Days - Discount Days))
Terms of 2/10 net 30 work out to an annualized rate of about 37.2% - usually far better than any short-term financing cost, making the discount worth taking.
It adds your specified payment terms (like Net 30) to the invoice date to determine the exact due date.
Net 30 means payment is due within 30 days of the invoice date; Net 15, Net 60, etc. specify different day counts.
It means a 2% discount applies if paid within 10 days, otherwise the full amount is due within 30 days.