1/15 Net 30 payment terms: meaning, due date and discount cost

1/15 Net 30 at a glance

Type

Early-payment discount

Discount

1% if paid within 15 days

Full amount due

30 days after the invoice date

Cost of skipping the discount

24.6% a year simple, 27.7% compounded

Also written

1/15 n/30, 1% 15 net 30

Example dates

What the discount is worth

Skipping the discount buys 15 more days to pay, at a cost of 1% of the invoice: 24.6% a year as a simple rate (1/99 × 365/15), or 27.7% compounded.

Average amount owed to the supplier

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

Setting up 1/15 Net 30 in your ERP

Business Central

Due Date Calculation 30D; Discount Date Calculation 15D, 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 15

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

1/15 Net 30 is a discount term, not a net term. The buyer may deduct 1% from the invoice amount if payment is made within 15 days of the invoice date. If the buyer does not take the discount, the full invoice amount is due in 30 days. You will also see it written as 1/15 n/30 or 1% 15 net 30. The dates count from the invoice date, not from the date the invoice was received or entered.

The discount is small on a single invoice but easy to misplace. 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. The buyer gives up 15 days of credit to capture that 1%. Skipping the discount has an implied cost: 24.6% simple annual, or 27.7% compounded annual.

The term is sometimes confused with month-end terms or with longer discount windows. 1/15 Net 30 counts from the invoice date. A 1% discount for paying 15 days early is not the same as a 1% discount for paying by the 15th of the following month. The invoice date controls both the discount date and the net due date. If an invoice is dated Thursday, Jan 15, 2026, the discount runs through Friday, Jan 30, 2026, and the full amount is due Saturday, Feb 14, 2026.

Working out the dates

Start with the invoice date printed on the invoice. Add 15 calendar days for the discount date and 30 calendar days for the net due date. Do not count from the received date, the scan date, the approval date or the date someone keyed the invoice. Those dates can move the discount window by days and cause a valid discount to be missed or an invalid discount to be taken.

Use the given examples to test your date logic. An invoice dated Thursday, Jan 15, 2026 has a discount until Friday, Jan 30, 2026 and a full amount due Saturday, Feb 14, 2026. An invoice dated Friday, Feb 27, 2026 has a discount until Saturday, Mar 14, 2026 and a full amount due Sunday, Mar 29, 2026. An invoice dated Friday, Dec 18, 2026 has a discount until Saturday, Jan 2, 2027 and a full amount due Sunday, Jan 17, 2027. Each has 30 calendar days to due.

Weekends matter. In each example the net due date falls on a weekend, and two of the discount dates also fall on a weekend. The payment date that counts is the date the supplier receives the money or applies it, not the date the check is printed or the payment file is created. If a discount date lands on a Saturday or Sunday, work back to the last business day your payment can settle and still be applied within the 15-day window. Do not assume the supplier will extend the discount because the date fell on a weekend.

Keep the invoice date visible on the payment record. When the discount is taken, the payment amount should be the invoice amount less 1%. When the discount is not taken, the payment amount should be the full invoice amount. A payment that sits between those two amounts usually means the discount was applied late, applied to the wrong invoice, or not applied at all. Check the date and the amount together before release.

Is the discount worth taking?

Taking the 1% discount means paying 15 days earlier than the net due date. The given cost of skipping the discount is 24.6% simple annual, or 27.7% compounded annual. Compare those figures with what your business pays for short-term financing or what it earns on cash. A 24.6% implied return is high relative to many funding costs, but the decision belongs to your treasury or finance lead.

The dollar amounts are straightforward. 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. The buyer gives up 15 days of credit to capture the 1%. If the buyer skips the discount, the full amount is due in 30 days and the buyer keeps the cash for 15 more days.

Cash flow does not change just because the term offers a discount. With $250,000 a year of spend with one supplier, about $20,548 is owed on average, the same as on Net 30. With $1,000,000 a year of spend, about $82,192 is owed on average, the same as on Net 30. With $5,000,000 a year of spend, about $410,959 is owed on average, the same as on Net 30. The discount affects the amount paid, not the average balance owed under the term. If your process cannot reliably pay within 15 days of the invoice date, measure your actual payment dates before you change the payment calendar.

Where these invoices go wrong

The most common error is keying the term as Net 30 and dropping the 1% discount. The invoice still shows 1/15 Net 30, but the payment record carries only the 30-day due date. The buyer then pays the full amount on day 30 and never sees the discount. The opposite error is keying a longer discount window and deducting 1% on a payment made after day 15. Both errors are caught by checking the invoice date against the payment date before release.

A second error is counting from the received date instead of the invoice date. An invoice dated Thursday, Jan 15, 2026 may not reach AP until Monday, Jan 19, 2026. Counting 15 days from receipt puts the discount date at Tuesday, Feb 3, 2026, which is after the real discount date of Friday, Jan 30, 2026. The payment is then short by 1% and the supplier either deducts the difference from a later invoice or places the account on hold. Use the invoice date, not the mailroom date.

A third error is paying a statement as well as the invoice. The supplier statement lists the invoice as open, AP pays the statement, and the original invoice is paid again in the same run or the next run. The same thing happens when a supplier re-sends an invoice with a new date or a new reference and AP keys it as a new invoice. The duplicate is easy to miss because the amounts match and the supplier does not always flag it. Match new invoices to open items by invoice number, amount and date before paying.

A fourth error is taking the discount after the window and calling it a valid deduction. If the payment is made after the 15-day discount date, the buyer owes the full amount. Deducting 1% anyway creates a short pay, which can lead to a supplier collection call, a late fee or a credit hold. Check that the payment date is within 15 days of the invoice date before you reduce the payment. If the date is outside the window, pay the full amount or ask the supplier for written approval before deducting anything.

Questions