2/10 net 30 is an early-payment discount term meaning the buyer can take a 2% discount if they pay within 10 days, otherwise the full invoice is due in 30 days. It is one of the most common credit terms in business-to-business trade, written on the invoice as a quick shorthand for the deal on offer: pay fast and save a little, or pay in full by the deadline.
The term does two jobs at once. For the seller it pulls cash in sooner and lowers the risk of a late or unpaid invoice. For the buyer it is a genuine saving, and as the maths below shows, a surprisingly valuable one. Read the notation as discount / discount days, then net, full term. You will also see it written 2/10 n/30 or spoken as "two ten, net thirty"; they all mean the same thing. It belongs to the wider family of early-payment, cash and settlement discounts, which are different names for the same basic idea of paying less in exchange for paying sooner.
2% off if you pay in 10 days.Otherwise the full amount is due in 30 days.
Read it left to right.Discount / discount window, then net, full term.
The implied rate is high.Skipping a 2/10 net 30 discount costs roughly 37% a year.
Multiply the invoice by 2% to get the discount, then subtract it to find the discounted amount. The figure that really matters, though, is the annualised cost of passing up the discount, because that is what tells you whether paying early is worth it. Enter your own terms below.
Defaults show classic 2/10 net 30 terms. General information, not financial advice.
On a 5,000 invoice, 2% is a 100 saving, so you pay 4,900 if you settle by day 10. That 100 might not feel like much in isolation, but scale it across every invoice you pay in a year and it becomes a meaningful line in the budget. The annualised cost figure is the eye-opener: turning down 2/10 net 30 is like borrowing at about 37% a year, far more expensive than almost any line of credit. Compare offers in the early payment discount calculator, or set the terms to apply automatically with prompt payment discounts in Xero and QuickBooks.
The 2% discount is earned for paying just 20 days early, and repeating that 2% return every 20 days across a year compounds into roughly 37%. The standard formula divides the discount by (100 less the discount), then multiplies by 365 divided by the number of days saved.
The intuition is worth holding onto. You are not earning 2% a year, you are earning 2% in 20 days, and there are roughly 18 of those 20-day windows in a year. That is why even a discount that looks small on the page turns into a double-digit annual return. The lesson for buyers is blunt: if you have the cash, take the discount, because no safe investment pays anywhere near that, and if you would otherwise draw on an overdraft or card to fund it, the discount still usually wins. The only time to skip it is when paying early would genuinely put your own cash flow at risk.
Picture an invoice dated 1 March for 5,000 on 2/10 net 30 terms. Pay on or before 11 March and you send 4,900, keeping 100. Pay any time from 12 March up to 31 March and the full 5,000 is due, with no discount. Miss 31 March and you are now late, which is where late fees or interest may start to apply. The same shorthand describes a whole family of terms, so once you can read 2/10 net 30, you can read the rest. Here are the variants you will see most often on invoices.
| Term | What it means | Annualised cost of skipping |
|---|---|---|
| 2/10 net 30 | 2% off if paid within 10 days, full amount due in 30. | About 37% |
| 1/10 net 30 | 1% off within 10 days, full amount due in 30. | About 18% |
| 2/10 net 60 | 2% off within 10 days, full amount due in 60. | About 15% |
| 3/10 net 30 | 3% off within 10 days, full amount due in 30. | About 56% |
| net 30 | No discount, full amount simply due in 30 days. | n/a |
As the table shows, a longer gap between the discount window and the due date lowers the effective rate, while a bigger discount raises it. For more on the underlying mechanics, see settlement discount, the related cash discount, and how plain net payment terms work without a discount.
Offer it when faster cash is worth more to you than the 2% you give up, which is often the case if late payment is a recurring problem or your own borrowing costs are high. The discount is effectively the price you pay to bring cash forward, so the question is whether that price is cheaper than your alternatives. If a 2% discount pulls a 5,000 invoice in 20 days sooner and saves you dipping into a facility that costs more than 37% annualised, it pays for itself.
A discount only helps if it is enforced cleanly and priced against your margins. Keep these in mind before switching it on.
Enforce the windowApply the discount only if cleared funds arrive within the discount days, not just because a deduction was claimed.
Watch the deduct-but-pay-late trapSome customers take the discount and still pay late, quietly eroding the benefit.
Mind the adminTracking eligibility, applying the right amount and reconciling part-payments by hand is fiddly at volume; automation keeps it consistent.
Model it against marginOn a thin-margin product, 2% of the invoice can be a large slice of profit, so the cash-flow gain has to be real.
Many sellers reserve the discount for slower-paying segments or larger invoices where the cash matters most, rather than offering it to everyone by default, and automating it inside your accounting system removes the friction. Used selectively and enforced consistently, 2/10 net 30 is a simple, well-understood lever for getting paid faster without resorting to chasing or financing.
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