Early payment terms like “2/10 net 30” (a 2% discount if paid within 10 days, full amount due in 30) show up constantly in invoicing and vendor contracts, and most people never work out what skipping the discount actually costs. Annualized, it’s usually a lot more than it looks.
Annualized cost of not taking the discount
0%
If that annualized rate is higher than what you’d pay in interest to borrow the money elsewhere, taking the discount (even by paying early using short-term credit) is usually the better deal. This works the same way whether you’re offering the discount to clients or deciding whether to take one from a supplier.