Definition
2/10 Net 30 is an early payment discount term meaning the client can take 2 percent off the invoice if they pay within 10 days of the invoice date. Otherwise the full amount is due 30 days after the invoice date. It is the most common discount term in business-to-business invoicing.
Also called: 2 10 Net 30, 2/10 n/30
2/10 Net 30 in practice
Read the term in three parts: 2 is the discount percentage, 10 is the number of days the discount is available, and Net 30 is the deadline for the full amount. Both windows count calendar days from the invoice date, not from when the client receives the invoice.
For the client, skipping the discount is expensive. Giving up 2 percent to keep the money for 20 extra days works out to an annual cost of about 37 percent, which is why companies with cash on hand usually pay within the discount window.
For the seller, the discount trades a small amount of margin for faster cash. Decide in advance whether you will accept a discounted payment that arrives a day or two after the window closes.
Example
A $5,000 invoice dated March 1 with 2/10 Net 30 terms can be settled for $4,900 by March 11. After March 11, the full $5,000 is due by March 31.
How to write 2/10 Net 30 on an invoice
Put the term next to the due date and spell out both amounts and both dates, for example: "Terms: 2/10 Net 30. Take 2% ($100) off if paid by March 11. Full amount of $5,000 due March 31." The client should never have to work out the discount.
Agree with the client whether the discount applies to the full total or only to the goods or services before tax and shipping, and state it on the invoice. Practice varies by industry, so do not leave it to the client to decide.
2/10 Net 30 vs Net 30
Net 30 gives the client 30 days to pay the full amount with no reason to pay sooner. 2/10 Net 30 keeps the same 30-day deadline but rewards payment in the first 10 days. If most of your clients already pay on time, plain Net 30 costs you less.
2/10 Net 30 due date calculator
Pick an invoice date and a term. You will get the due date and a line you can put on the invoice.
Choose an invoice date to see the due date.
Due on receipt, Net 7, Net 15, and Net 30 fill the due date in Invoice Website. Other terms, such as Net 45, Net 60, 2/10 Net 30, EOM, and prox, go in custom terms.
Frequently Asked Questions
How do you calculate 2/10 Net 30?
Multiply the invoice total by 2 percent and subtract it if payment arrives within 10 days. On a $2,500 invoice the discount is $50, so the client pays $2,450 by day 10 or $2,500 by day 30.
What if the client takes the discount after day 10?
They still owe the discount amount. You can bill the difference or accept the short payment as goodwill for a good client. State your policy in your terms so you are not deciding case by case.
Is 2/10 Net 30 the same as an early payment discount?
It is the most common form of one. An early payment discount is the general idea, and 2/10 Net 30 is a specific version with a 2 percent discount, a 10-day window, and a 30-day deadline.
Related terms
- Early payment discount An early payment discount is a small percentage taken off the invoice total if the client pays before a set early deadline.
- 1/10 Net 30 1/10 Net 30 is an early payment discount term meaning the client can take 1 percent off the invoice if they pay within 10 days of the invoice date.
- 2/10 Net 60 2/10 Net 60 is an early payment discount term meaning the client can take 2 percent off the invoice if they pay within 10 days of the invoice date.
- Net 30 Net 30 is a payment term meaning the full invoice amount is due 30 calendar days after the invoice date.
- Payment terms Payment terms are the conditions on an invoice that state when and how the client must pay.
- Discount A discount on an invoice is a reduction in price, shown either as a percentage or a fixed amount, applied to a line item or to the subtotal.
- Cash flow Cash flow is the movement of money into and out of a business over a period.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.