How to use this calculator
- Enter early-payment discount (%), discount payment day, normal payment day.
- Choose a display currency, then select Calculate. Results also update after a brief pause while you edit.
- Read the result with the assumptions below. Export details or save a second scenario to compare your choices.
Formula and method
Effective annual cost=(1/(1−discount))^(365/(normal day−early day))−1.
Assumptions and limitations
Constant repeated terms and a 365-day convention; invoice eligibility, taxes and late penalties are excluded.
Worked example
With early-payment discount (%) = 2, discount payment day = 10, normal payment day = 30, effective annualized financing cost is approximately 44.585293%.
What the result means
This annualizes the cost of keeping cash for the extra credit period.
Common questions
How should I interpret effective annualized financing cost?
This annualizes the cost of keeping cash for the extra credit period.
What should I check before using this result?
Constant repeated terms and a 365-day convention; invoice eligibility, taxes and late penalties are excluded.
Methodology and transparency
Calculation specification reviewed on 2026-10-14. Mathematical implementation is tested against independent reference fixtures. This does not imply review by a licensed financial professional. Read the testing and precision policy.