---
title: "Early payment discount: definition | Rex glossary"
description: "A discount for paying before the due date, written like 2/10 Net 30: 2% off if paid within 10 days, otherwise the full amount within 30."
canonical: https://www.rex.inc/glossary/early-payment-discount
---

# Early payment discount

Also called 2/10 Net 30

A discount for paying before the due date, written like 2/10 Net 30: 2% off if paid within 10 days, otherwise the full amount within 30.

Early payment discounts trade margin for faster cash. Whether they're worth offering depends on your cost of capital: for the buyer, taking 2/10 Net 30 is equivalent to earning roughly 37% a year on the money.

They also create a common deduction: customers who take the discount after the window has closed. Each one needs a decision, to accept the difference or chase it, and a consistent policy behind it.

## Related terms

- [Payment terms (Net 30) The agreed conditions for paying an invoice. Net 30, for example, means the full amount is due 30 days after the invoice date.](https://www.rex.inc/resources/glossary/payment-terms-net-30)
- [Short payment When a customer pays less than the full invoice amount, leaving a balance that needs to be explained, accepted or collected.](https://www.rex.inc/resources/glossary/what-is-a-short-payment)
- [Invalid deduction A deduction the customer isn't entitled to under the agreement, such as a duplicate claim, an expired discount or a penalty for something that didn't happen.](https://www.rex.inc/glossary/invalid-deduction)

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