Glossary: Order rules

Early payment discount

An early payment discount is a reduction in the invoice total that a seller offers if the buyer pays within a short window. It is written in a form such as 2/10 net 30, which means 2% off if paid within 10 days, and the full amount due in 30.

Reviewed by Hoa Nguyen, Senior Marketer. Last reviewed October 4, 2026
Last updated October 4, 2026

In detail

Sellers use an early payment discount to get paid faster. A 2/10 net 30 term gives the buyer a 2% discount for paying by day 10, and otherwise the whole invoice is due by day 30. Buyers with spare cash take it, and sellers collect their money 20 days sooner.

The discount is much more expensive than it looks. Taking 2% for paying 20 days early works out to roughly 37% a year, calculated as 2 / 98 x 365 / 20. That means a buyer is usually better off paying early if they can, and a seller should check that the discount costs less than the alternative way to raise cash, such as a loan or factoring.

State the terms on the invoice: the discount percentage, the discount period, the net period, and what date they start from. Decide in advance how you treat part payments and late payments, and who is allowed to take the discount, because the terms are easy to misread and disputes follow.

An early payment discount builds on net terms, and it is normally offered only to accounts on net terms. It also affects your reporting, because the discount should be recorded as a reduction in revenue or as a financing cost depending on your accounting rules, so tell your accountant how you apply it.

Example

A buyer receives a $5,000 invoice on 2/10 net 30 terms. Paying within 10 days costs $4,900 (a $100 discount). Paying on day 30 costs the full $5,000.

On Shopify

Shopify's B2B payment terms are no payment terms, Net 7, 15, 30, 45, 60 or 90, due on fulfillment, and a fixed date. An early payment discount is not one of the listed options. Payments are not captured automatically when the terms expire.

Source: Shopify Help Center: B2B payment terms (read October 4, 2026).