2/10 Net 45 payment terms: meaning, due date and discount cost

2/10 Net 45 at a glance

Type

Early-payment discount

Discount

2% if paid within 10 days

Full amount due

45 days after the invoice date

Cost of skipping the discount

21.3% a year simple, 23.5% compounded

Also written

2/10 n/45, 2% 10 net 45

Example dates

What the discount is worth

Skipping the discount buys 35 more days to pay, at a cost of 2% of the invoice: 21.3% a year as a simple rate (2/98 × 365/35), or 23.5% compounded.

Average amount owed to the supplier

Paying on the due date, about 45 days after the invoice date on average.

Setting up 2/10 Net 45 in your ERP

Business Central

Due Date Calculation 45D; Discount Date Calculation 10D, Discount % 2

Xero

Bills due 45 day(s) after the invoice date

NetSuite

Term with Days Till Net Due 45, % Discount 2, 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

2/10 Net 45 is a discount term: the buyer may deduct 2% by paying within 10 days of the invoice date, or pay the full amount in 45 days. It is also written 2/10 n/45 or 2% 10 net 45. The clock starts on the invoice date, not at month end and not on the date the invoice reaches AP.

On a $1,000 invoice the discount is $20, so paying early costs $980. 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. Those amounts are the difference between the gross invoice and the discounted payment.

Taking the discount means giving up 35 days of credit. The buyer pays on day 10 instead of day 45. That trade-off is the whole decision: a 2% saving for 35 days earlier payment, not a general prompt-pay discount that applies whenever AP has cash available.

Working out the dates

Start with the invoice date and count calendar days. An invoice dated Thursday, Jan 15, 2026 has a discount until Sunday, Jan 25, 2026 and a full amount due Sunday, Mar 1, 2026. Both dates fall on a weekend, so the internal payment cut-off must be early enough to release the payment by the stated date.

An invoice dated Friday, Feb 27, 2026 has a discount until Monday, Mar 9, 2026 and a full amount due Monday, Apr 13, 2026. An invoice dated Friday, Dec 18, 2026 has a discount until Monday, Dec 28, 2026 and a full amount due Monday, Feb 1, 2027. Each is 45 calendar days to the full due date.

Use the invoice date even when the invoice arrives late. If an invoice dated Friday, Dec 18, 2026 reaches AP after the discount window, the window does not move; it still ends Monday, Dec 28, 2026. Counting from the received date instead of the invoice date is a common AP error because it can make a missed discount look available or make a valid discount look expired.

Is the discount worth taking?

Compare the 2% saving with the 35 days of credit given up. The simple annual cost of skipping the discount is 21.3%; the compounded annual cost is 23.5%. Compare 21.3% with your own cost of funds. If your financing is cheaper than that, the discount arithmetic may be attractive, but the cash forecast and available liquidity still decide whether AP should take it.

The dollar effect is small on a single invoice and larger across a supplier. On a $1,000 invoice the discount is $20; on a $10,000 invoice it is $200; on a $100,000 invoice it is $2,000. AP managers should review the supplier relationship, not just one invoice, because the decision repeats every month.

Net 45 also changes the payables balance. With $250,000 a year of spend with one supplier, about $30,822 is owed on average, $10,274 more than on Net 30. With $1,000,000 a year of spend with one supplier, about $123,288 is owed on average, $41,096 more than on Net 30. With $5,000,000 a year of spend with one supplier, about $616,438 is owed on average, $205,479 more than on Net 30. Taking the discount pulls the payment forward to day 10 and reduces that balance; skipping it keeps the cash longer but carries the 21.3% simple annual cost.

Where these invoices go wrong

Keying the wrong term is the first failure. An invoice entered as Net 45, or as 2/10 Net 30, will either miss the 2% discount or state the wrong due date. AP should key 2/10 Net 45 exactly on the vendor record and check the invoice terms against that record before the first payment run.

Counting from the received date instead of the invoice date is the second. Use the invoice date to set both dates. The third is taking a discount after the window. If the discount date has passed, do not deduct 2% unless the supplier has changed the terms in writing; pay the full amount and note why.

Statement and duplicate errors are separate from the term but common on these suppliers. Paying a statement as well as the invoice double-counts an item that is already in the payment run. Paying a re-sent invoice twice happens when AP does not match invoice number, invoice date and amount to the vendor record and payment history. Reconcile the statement to open invoices, and check every re-sent invoice against prior payments before releasing it.

Questions