Calculation

Cash Discount and Payment Terms

Created on · payment-terms

Compares a cash discount against the financing cost of early payment.

Invoice amount

Cash Discount

Cash-discount period

Payment term

Borrowing rate

How to use the result

Enter actual operating values. The calculation considers only the entered costs and quantities.

i = s / (1 − s) · 360 / (payment term − cash-discount period)

Sources: Managerial cost and performance accounting; formulas are shown transparently.