1/10 Net 60 payment terms: meaning, due date and discount cost

1/10 Net 60 at a glance

Type

Early-payment discount

Discount

1% if paid within 10 days

Full amount due

60 days after the invoice date

Cost of skipping the discount

7.4% a year simple, 7.6% compounded

Also written

1/10 n/60, 1% 10 net 60

Example dates

What the discount is worth

Skipping the discount buys 50 more days to pay, at a cost of 1% of the invoice: 7.4% a year as a simple rate (1/99 × 365/50), or 7.6% compounded.

Average amount owed to the supplier

Paying on the due date, about 60 days after the invoice date on average.

Setting up 1/10 Net 60 in your ERP

Business Central

Due Date Calculation 60D; Discount Date Calculation 10D, Discount % 1

Xero

Bills due 60 day(s) after the invoice date

NetSuite

Term with Days Till Net Due 60, % 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 60 is a discount term with two dates that matter. The buyer may take a 1% discount by paying within 10 days of the invoice date. If the buyer does not take the discount, the full amount is due in 60 days. The same term also appears as 1/10 n/60 and 1% 10 net 60. The clock starts on the invoice date, not the date the invoice is received and not month-end.

The discount is small in percentage terms but concrete in dollars. 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. In each case the buyer gives up 50 days of credit to save 1%.

The term affects both the vendor record and the cash forecast. With $1,000,000 a year of spend with one supplier, about $164,384 is owed on average, $82,192 more than on Net 30. That is the cash effect of 60-day terms before any discount decision is made. AP should key both parts of 1/10 Net 60: the 1% discount window and the 60-day net due date.

Working out the dates

Count calendar days from the invoice date. An invoice dated Thursday, Jan 15, 2026 has a discount until Sunday, Jan 25, 2026 and the full amount due Monday, Mar 16, 2026. The due date gives 60 calendar days and does not fall on a weekend. Because the discount date is a Sunday, release the payment earlier in the week rather than waiting until the weekend.

An invoice dated Friday, Feb 27, 2026 has a discount until Monday, Mar 9, 2026 and the full amount due Tuesday, Apr 28, 2026. An invoice dated Friday, Dec 18, 2026 has a discount until Monday, Dec 28, 2026 and the full amount due Tuesday, Feb 16, 2027. The cross-year example is a reminder that the 60 days run through the calendar, not through the fiscal year or a statement cycle.

Do not count from the received date. A late-received invoice still carries its original invoice date. If an invoice dated Thursday, Jan 15, 2026 arrives later, the discount date remains Sunday, Jan 25, 2026. Starting the 10-day count at receipt shifts the window and usually causes the team to miss it. If a discount date falls on a weekend, schedule the remittance so the supplier receives it by the stated date.

Is the discount worth taking?

Skipping the discount means keeping cash for 50 more days but giving up 1%. The cost of skipping the discount is 7.4% simple annual and 7.6% compounded annual. Those figures are the comparison point, not a rule that every buyer should follow.

On a $100,000 invoice the choice is $99,000 within 10 days or $100,000 at 60 days. The buyer saves $1,000 by paying 50 days early. Compare the 7.4% simple annual cost of skipping the discount with your own cost of funds. If your cost of funds is below that rate, the discount is financially attractive. If your cost of funds is above it, paying at 60 days may be the better use of cash.

The decision should be made per supplier and per invoice, not by habit. A buyer with tight cash may need the full 60 days even when the discount looks attractive. A buyer with available cash may prefer the 1% saving. The point is to make the comparison deliberately and then pay on the chosen date, not to take the discount after the window or to miss it because nobody checked the invoice date.

Net 60 also changes the cash profile. With $250,000 a year of spend with one supplier, about $41,096 is owed on average, $20,548 more than on Net 30. With $5,000,000 a year of spend with one supplier, about $821,918 is owed on average, $410,959 more than on Net 30. Those amounts help explain why a 1% discount can be worth real money, but also why the 60-day due date matters to the cash forecast.

Where these invoices go wrong

The first mistake is keying the wrong term. A clerk sees 1/10 Net 60 but records the vendor as Net 60 only, so the 1% discount is never offered to the approver. The opposite also happens: a term is keyed as a discount term when the supplier did not offer one, and AP deducts 1% that is not due. Both errors come from treating the term as a note rather than as two separate dates and amounts.

The second mistake is counting from the received date instead of the invoice date. An invoice dated Thursday, Jan 15, 2026 has a discount until Sunday, Jan 25, 2026. If the team starts the 10-day clock when the invoice reaches the AP inbox, the discount date moves later on the internal calendar, and the payment may be released after the supplier's actual deadline.

The third mistake is taking the discount after the window. The 10 days are calendar days from the invoice date. A payment released after Sunday, Jan 25, 2026 on the Jan 15 invoice is late for the discount, even if internal approval finished sooner. Deducting 1% after the window creates a short payment against the supplier's terms and turns a routine invoice into a collection item.

The fourth and fifth mistakes create duplicate payments. AP may pay a statement as well as the individual invoice, especially when the statement total includes invoices already paid. AP may also pay a re-sent invoice twice when the supplier sends the same invoice with a new reference or a fresh copy. Match by invoice number and vendor, check whether the original is already paid, and treat a re-sent invoice as the same liability unless the supplier has issued a genuine replacement.

Questions