RedHub AI
Quick Kit · The Math
How the math works
What a 2/10 net 30 discount is really worth
An early-payment discount looks like small change. As an annual return, it's often the best yield your cash can find — or a bill your buffer can't afford.
The inputs (one $18,000 invoice, 2/10 net 30)
Discount
2%
if paid early
Pay by
10 days
to earn it
Otherwise
net 30
full amount due
Cost of capital
12%
your hurdle rate
(2 % ÷ 98) × (365 ÷ 20 days) × 100
= 2.04% per period × 18.25 periods a year = 37.2% annualized — vs a 12% cost of capital
Annualized return · pay early
37.2%APR-equiv
Far above your 12% hurdle — take it (if the cash is there)
On $18,000 that's a real $360 for paying 20 days sooner.
A humble 2/10 net 30 discount is a 37% annualized return — but only if your cash buffer can fund it. The kit scores every invoice and runs a cash-buffer gate so it never tells you to chase a return you can't afford.
Annualized return assumes reinvestment and is a yardstick versus your cost of capital, not a promised return. Not financial, accounting, or legal advice.