See how payment terms eat your cash flow.
Enter invoice amount, payment terms, cost of capital, and late payment risk. See the true carrying cost and whether an early-pay discount saves you money.
Invoice payment terms calculator
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The hidden cost of Net 60
Net 60 means you've done the work but wait two months to get paid. If you carry a line of credit or credit card balance at 15–20% APR, a $10,000 invoice on Net 60 terms costs you $250+ in interest before you even collect. Always calculate the true cost of extended terms.
2/10 Net 30 explained
This common trade term gives buyers a 2% discount if they pay within 10 days instead of 30. For sellers with high cost of capital, it's worth it — you're paying 2% to get cash 20 days early. The annualized equivalent rate is about 36%, so if your borrowing costs are lower, offer it.
Late payment strategies
- Require 25–50% upfront on new clients
- Add late fees to your contract (1.5%/month)
- Send reminders 7 days before due date
- Offer early-pay discounts for reliable clients
- Shorten terms until trust is established
What does Net 30 payment terms mean?
Net 30 means the buyer has 30 days from the invoice date to pay in full. Net 60 and Net 90 extend that window to 60 or 90 days. The longer the terms, the longer you wait to receive cash — and the more it costs you if you're carrying debt or have other uses for that capital.
What is a 2/10 Net 30 discount?
2/10 Net 30 means the buyer gets a 2% discount if they pay within 10 days, otherwise the full amount is due in 30 days. For sellers, this is worth offering when your cost of capital is high — you're essentially paying 2% to get paid 20 days earlier. Use this calculator to see if the math works for your situation.
How do I reduce the impact of late payments?
Strategies include requiring a deposit upfront (25–50%), adding late payment fees in your contract, sending automated payment reminders before and on the due date, offering early-pay discounts to incentivize faster payment, and shortening your terms for new clients until trust is established.
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