1/10 Net 30 payment terms: meaning, due date and discount cost

1/10 Net 30 at a glance

Type

Early-payment discount

Discount

1% if paid within 10 days

Full amount due

30 days after the invoice date

Cost of skipping the discount

18.4% a year simple, 20.1% compounded

Also written

1/10 n/30, 1% 10 net 30

Example dates

What the discount is worth

Skipping the discount buys 20 more days to pay, at a cost of 1% of the invoice: 18.4% a year as a simple rate (1/99 × 365/20), or 20.1% compounded.

Average amount owed to the supplier

Paying on the due date, about 30 days after the invoice date on average.

Setting up 1/10 Net 30 in your ERP

Business Central

Due Date Calculation 30D; Discount Date Calculation 10D, Discount % 1

Xero

Bills due 30 day(s) after the invoice date

NetSuite

Term with Days Till Net Due 30, % Discount 1, Days Till Discount Expires 10

QuickBooks Online and Sage Intacct also store payment terms with a due rule. Whether an early-payment discount is applied to the bill automatically differs by product (Sage Intacct AP terms can carry one; Xero terms set due dates only), so check the bill's due date and amount after setting up a new term.

What it means

1/10 Net 30 is a discount term. The buyer may take a 1% discount by paying within 10 days of the invoice date; otherwise the full amount is due in 30 days. It is also written 1/10 n/30 and 1% 10 net 30. The discount comes off the invoice total, not off the next statement or a later order.

On a $1,000 invoice the discount is $10, so paying early costs $990. On a $10,000 invoice the discount is $100, so paying early costs $9,900. On a $100,000 invoice the discount is $1,000, so paying early costs $99,000. Those amounts are the test for whether the term was keyed and paid correctly.

The 10 days and 30 days run from the invoice date. They do not run from the date the invoice was received, the date it was entered, or month-end. A vendor record that says only Net 30 will let the discount date pass unnoticed; keying the wrong term is one of the quiet ways AP teams lose money that was already available. Check the vendor record against the invoice before the first payment.

Working out the dates

Take the invoice date and count forward. An invoice dated Thursday, Jan 15, 2026 has a discount until Sunday, Jan 25, 2026, and the full amount is due Saturday, Feb 14, 2026. The full-amount due date falls on a weekend, so the payment calendar has to show it plainly rather than relying on a midweek run to catch it. The discount date also falls on a Sunday; a team that pays only on weekdays must schedule the payment so it is not held until after the discount date.

An invoice dated Friday, Feb 27, 2026 has a discount until Monday, Mar 9, 2026, and the full amount is due Sunday, Mar 29, 2026. Here the discount date is a Monday and the full-amount due date is a Sunday. The dates are not the same day of the week, so a rule of thumb about the same weekday will fail. Use the invoice date and the stated term each time.

An invoice dated Friday, Dec 18, 2026 has a discount until Monday, Dec 28, 2026, and the full amount is due Sunday, Jan 17, 2027. The year changes between the discount date and the full-amount due date. Counting from the received date instead of the invoice date is especially damaging over a year-end, when mail and approval delays are common. The invoice date controls; a later received date can make a late payment look early.

Is the discount worth taking?

The discount is not free money; it is a price for paying earlier. Under 1/10 Net 30 you give up 20 days of credit to save 1% of the invoice. Skipping the discount has a simple annual cost of 18.4% and a compounded annual cost of 20.1%. Compare 18.4% with your own cost of funds. If the discount return is above your cost of funds, taking it can make sense; if it is below, the discount may not be the best use of cash. Keep that comparison general and revisit it when rates change.

The dollar effect is easy to see. On a $100,000 invoice the discount is $1,000, so paying early costs $99,000. On a $1,000 invoice the discount is $10, so paying early costs $990. The smaller invoice is not worth a special bank run on its own, but the same term repeated across many invoices adds up. AP should not decide invoice by invoice from memory; the term belongs in the vendor record and the payment proposal.

Cash flow still matters. With $250,000 a year of spend with one supplier, about $20,548 is owed on average, the same as on Net 30. Taking the discount does not change that average balance, but it does change the timing of individual payments and the amount paid. A controller should see both the discount captured and the cash released.

Where these invoices go wrong

Keying the wrong term is the first failure. An invoice shows 1/10 Net 30 but the vendor record is set to Net 30, so the payment team works to the later date and the 1% is gone. The reverse also happens: a term is copied from an old invoice when the current invoice has different terms. Match the term on the invoice to the vendor record before releasing payment, and correct the record when it is wrong.

Counting from the received date instead of the invoice date is the second. If the invoice is dated Thursday, Jan 15, 2026 but reaches AP later, a received-date calculation shifts the discount deadline and makes a late payment look timely. The same error hides a missed discount at month-end. Use the invoice date on the document and the term on the vendor record.

Taking a discount after the window creates a short pay. On a $1,000 invoice dated Thursday, Jan 15, 2026, the discount is available until Sunday, Jan 25, 2026; paying $990 after that date leaves $10 unpaid. The vendor may apply the $10 to another invoice or hold the account, and the next statement will not reconcile. A late discount is not a bargain; it is a payment exception.

Paying a statement as well as the invoice, and paying a re-sent invoice twice, are duplicate-payment risks. A statement lists several invoices; if AP pays the statement and also pays one invoice on it, that invoice is paid twice. A re-sent invoice with the same invoice number but a new PDF can be entered a second time if the team matches on the email rather than the vendor and invoice number. Before payment, match vendor, invoice number, invoice date and gross amount, and check whether the discount was already taken.

Questions