Eric Kuvykin

Reviewed October 17, 2026. This guide replaces an earlier general overview; the original publication date and URL are retained.

A supplier’s early-payment discount can look attractive while consuming cash needed elsewhere. Compare the actual discount, verified payment expense and the cost of bridging the earlier outflow.

Write down two complete payment choices

Start with the invoice amount, discount terms, normal due date, eligible payment method and the date funds must reach the supplier. Obtain confirmation when terms are ambiguous. Keep the supplier’s quoted terms separate from your estimated transaction or funding costs. A payment scheduled before a deadline may still arrive later; ask the bank or provider how the selected method treats availability and exceptions.

Calculate the dollars before annualizing anything

For an illustrative $10,000 invoice, a 2% early-payment discount reduces the invoice outflow to $9,800 and saves $200. If the chosen payment method costs $10 and a short cash bridge costs $90 in total, the net benefit is $100: $200 minus $10 minus $90. If the bridge instead costs $230, the comparison becomes a $40 net disadvantage. These assumed charges are not actual financing offers.

Check whether earlier payment crowds out another obligation

Place the $9,800 outflow on the operating cash calendar alongside payroll, inventory and existing repayments. Even a positive arithmetic saving can be unsuitable if it leaves insufficient operating cash. If comparing a card option, confirm the supplier’s card price and acceptance terms rather than assuming the discount applies equally. Avoid calling the discount an APR: it is a price concession, while a financing quote has its own terms and cash flows.

Verify the destination independently of the offer

A new discount accompanied by changed bank details deserves independent verification. FBI IC3 advises verifying payment and account-change requests through a known contact rather than relying on the message alone. Retain the verified terms, timing assumptions and dollar comparison together. The decision record should show whether savings remain after payment expense and funding cost, and who approved the resulting cash commitment.

Sources and related reading

Primary reference: FBI IC3’s business email compromise guidance. Worked examples are illustrative analysis, not client results or provider quotes.

Continue with the AMS New Jersey merchant reading path and alternative financing cost and cash-flow guide.