Compare early-payment discounts on packaging invoices

Define the purchasing question

A payment discount has value only relative to the cash paid earlier, financing expenses and the exact eligibility conditions.

Use the arithmetic as a scoped scenario for invoice terms. Retain the quoted conditions and obtain accounting or financing review where needed.

Collect measurements that match the calculation

Confirm discount percentage, eligible invoice amount, deadline and normal due date. Enter the days accelerated and a stated financing rate. Check whether freight and tax are eligible.

Compare a confirmed invoice discount with simple financing on the discounted payment for days accelerated. Excludes tax, fees, cash constraints and compounding.

• Eligible invoice amount (currency)
• Early-payment discount (%)
• Days paid earlier (days)
• Annual simple financing rate (%)

Work through an illustrative case

Net advantage = Invoice × Discount% − Discounted payment × Annual rate × Days/365

EUR 200 discount less EUR 53.70 financing leaves EUR 146.30.

Replace these illustrative inputs with measured data or a quotation for the same scope. Change one assumption at a time so that a difference can be traced to a dimension, quantity, charge or process change.

Avoid the expensive comparison error

A percentage discount should not be compared directly with an annual financing percentage: the time interval and discounted principal matter. Bank fees and tax can change the real outcome.

• Use measured quantities and charges valid for this exact specification and period.
• Cost calculations do not qualify performance, protection or a supplier.

Common questions