2/10 EOM payment terms: meaning, due date and discount cost

2/10 EOM at a glance

Type

Month-based terms

Discount

2% if paid within 10 days of month end

Full amount due

30 days after the end of the invoice month

Cost of skipping the discount

37.2% a year simple, 44.6% compounded

Also written

2/10 EOM net 30, 2% 10 EOM

Example dates

What the discount is worth

Skipping the discount buys 20 more days to pay, at a cost of 2% of the invoice: 37.2% a year as a simple rate (2/98 × 365/20), or 44.6% compounded.

Average amount owed to the supplier

Paying on the due date, about 40 days after the invoice date on average.

Setting up 2/10 EOM in your ERP

Business Central

Due Date Calculation CM+30D; Discount Date Calculation CM+10D, Discount % 2

Xero

Bills due 30 day(s) after the end of the invoice month

NetSuite

Check whether your account's date-driven terms can express this; otherwise set the due date on the bill

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

2/10 EOM is an end-of-month term. A 2% discount may be taken by paying within 10 days after the end of the invoice month, and the net amount is commonly due 30 days after month end. It also appears as 2/10 EOM net 30 and 2% 10 EOM.

The EOM changes the clock. On a term with a discount window that starts at the invoice date, the invoice date drives everything. On 2/10 EOM, the window starts after the invoice month closes. The invoice date still matters because it assigns the invoice to a month, but the trigger for the discount is month end.

For a $1,000 invoice dated Thursday, Jan 15, 2026, the discount is $20 and paying early costs $980. The discount date is Tuesday, Feb 10, 2026, and the full amount is due Monday, Mar 2, 2026. The clerk should key the term exactly and make sure the invoice reaches the right payment run so the discount date is available.

Working out the dates

Start with the invoice month, not the invoice day. A $10,000 invoice dated Friday, Feb 27, 2026 has a discount date of Tuesday, Mar 10, 2026 and a full amount due date of Monday, Mar 30, 2026. That is 31 calendar days to the full due date. The 2% discount is $200, so paying early costs $9,800.

A $100,000 invoice dated Friday, Dec 18, 2026 has a discount date of Sunday, Jan 10, 2027 and a full amount due date of Saturday, Jan 30, 2027. That is 43 calendar days to the full due date. The discount is $2,000, so paying early costs $98,000. The discount date falls on a Sunday and the full amount due date falls on a Saturday, so confirm the supplier's documented weekend rule before you schedule the payment.

Counting from the received date is the common error. If the invoice dated Thursday, Jan 15, 2026 arrives later in January, the discount date is still Tuesday, Feb 10, 2026. Ten days from receipt is not the test under 2/10 EOM. The month-end rule controls.

Is the discount worth taking?

The discount is 2% for paying 20 days earlier than the net date. Skipping the discount to hold the cash for those 20 days has a simple annual cost of 37.2%; the compounded annual cost is 44.6%. Compare 37.2% with your own cost of funds; that comparison, not habit, should drive the decision.

On a $10,000 invoice the discount is $200, so paying early costs $9,800. On a $100,000 invoice the discount is $2,000, so paying early costs $98,000. The saving is immediate if the payment is made by the discount date. The cash-flow cost is also real: with $1,000,000 a year of spend with one supplier, about $109,589 is owed on average, $27,397 more than on Net 30. With $5,000,000 a year of spend, about $547,945 is owed on average, $136,986 more than on Net 30.

The 2% is not a reason to ignore the cash position. A controller should look at the discount rate, the days of credit given up, and the company's cash position. The 37.2% figure is the simple annual cost of skipping the discount; it is not a forecast or a promised return.

Where these invoices go wrong

Keying the wrong term is the first failure. A clerk keys 2/10 EOM as a different term, so the payment calendar starts on the invoice date instead of after month end. The invoice may show one term and the vendor record another. Match the two before approval, and correct the vendor record when the invoice is right. Otherwise the discount date will be wrong on every invoice from that supplier.

Counting from the received date is the second failure. An invoice dated Thursday, Jan 15, 2026 has a discount date of Tuesday, Feb 10, 2026 under 2/10 EOM, even if it arrives later in January. A clerk who counts ten days from receipt will miss the discount or take it late. Taking a discount after the window is the third failure: a payment made after Tuesday, Feb 10, 2026 that deducts $20 from a $1,000 invoice leaves $980, which is a short pay because the discount date was Tuesday, Feb 10, 2026.

Paying a statement as well as the invoice creates a duplicate payment. A statement lists open invoices; it is not a new invoice. If AP pays the statement total and also pays the invoice listed on it, the supplier is paid twice. Reconcile the statement to open invoices and unapplied credits before paying. A re-sent invoice can also be paid twice when the invoice number, date and amount are not matched to the vendor record. Check those three fields before releasing payment, not after.

At month end, review discounts taken after the window and invoices where a 2% discount was available but not taken. Small process errors add up: a missed $20 discount on a $1,000 invoice is small, but the same miss across many invoices is not. The controls are simple: exact term, month-end start date, invoice-level matching and a check for duplicates before payment.

Questions