You offered 2% for ten days. The people who took it were never going to be late.

An early-payment discount looks like a cash flow fix. Its arithmetic points the other way, and it tends to be taken by exactly the wrong accounts.

By Steve 5 min read
Abstract bridge artwork for You offered 2% for ten days. The people who took it were never going to be late.

Early-payment discounts are one of the few commercial decisions a business makes without ever pricing. Terms of 2% for payment within ten days, net thirty, get added to the invoice template because a customer asked, or because a bookkeeper suggested it, or because it seemed like a cheap way to pull cash forward. It rarely goes through the same scrutiny as a 2% price cut: which is precisely what it is. The arithmetic nobody runs Take 2/10 net 30 at face value. The customer pays 98 instead of 100, twenty…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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