Cash Discount Calculator
Calculate whether cash discount is worthwhile for you. Compare cash discount advantage with payment term. Free online with examples for 2026.
Amount with Discount
€4,900.00
Savings
€100.00
Eff. Annual Rate
36.73 %
Definitely take the discount!
The effective annual rate of 36.73 % represents the cost of forgoing the discount and paying 20 days later. As long as your overdraft rate is below 36.73 %, it pays to take the discount.
Note: These calculations are for informational purposes only and do not replace professional tax or financial advice. All information without guarantee.
FAQ
Frequently Asked Questions
What is a cash discount (Skonto)?
Skonto is a price reduction for prompt payment, typically 2-3% for payment within 10 days. Taking skonto is almost always financially beneficial, as the annualized saving far exceeds typical loan interest rates.
How do I calculate the annualized benefit of Skonto?
Use the formula: (Skonto rate / (100 - Skonto rate)) times (360 / (payment term - Skonto term)) times 100. A 2% Skonto for payment within 10 days vs. 30 days equals about 36% annualized return.
Are my entered amounts stored anywhere?
No. All calculations happen exclusively in your browser. Your inputs are never sent to our server or stored. You can safely enter sensitive financial data.
Guide
Quick Answer
The cash discount calculator computes the discount amount and the effective annual rate that a cash discount for early payment provides.
What is the Cash Discount Calculator?
The cash discount calculator computes the discount amount and the effective annual rate that a cash discount for early payment provides.
How does the Cash Discount Calculator work?
Enter the invoice amount, discount rate and payment terms. The calculator determines the discount amount and the effective annual rate. A high effective rate indicates that early payment is worthwhile.
Key Data and Facts
Typical cash discount: 2-3% for payment within 10 days. Effective annual rate for 2% discount / 20 days early: approx. 36%. Cash discounts are almost always worthwhile.
Step-by-Step Guide
How to calculate the early-payment discount benefit step by step: 1. Enter the invoice amount: the gross amount of the invoice. 2. Specify the discount rate: usually 2-3 %. 3. Enter the payment deadlines: the discount period (e.g. 10 days) and the regular payment term (e.g. 30 days). 4. Calculate the discount amount: invoice amount x discount rate / 100. 5. Calculate the effective annual interest rate: eff. interest = (discount rate / (100 - discount rate)) x (360 / (payment term - discount period)) x 100. This value shows how much return taking the discount yields. 6. Decision: if the effective annual interest rate is higher than your financing costs (overdraft credit), the early-payment discount is worthwhile. Example: invoice 10,000 EUR, 2 % discount for payment within 10 days, payment term 30 days. Discount amount: 10,000 x 0.02 = 200 EUR. Amount payable: 9,800 EUR. Effective annual interest rate: (2 / 98) x (360 / 20) x 100 = 36.7 %. Even with financing through an overdraft credit (12 %), the discount is worthwhile: 36.7 % return vs. 12 % credit costs.
Calculation Example
Invoice EUR 10,000, 2% early-payment discount within 10 days, payment term 30 days. Discount amount: EUR 200. Effective annual interest rate: 36.7%. Worthwhile if financing costs are below 36.7%.
Sources · E-E-A-T
Official sources
Calculations are based on applicable German laws and official data:
- Deutsche Bundesbank
- Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)
- Statistisches Bundesamt (Destatis)
Full methodology at Methodology.
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