- Additional credit period
- 35 days
- Discounted payment amount
- 985,000
- Discount amount
- 15,000
- Period cost of forgoing discount
- 1.5228 %
- Simple annualized cost
- 15.8811 %
- Effective annualized cost
- 17.0714 %
- Simple interest on discounted funding amount
- 6,139.3836
- Discount less modeled funding interest
- 8,860.6164
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Enter the two eligible payment dates
The net payment day must be later than the discount deadline. The tool treats the earlier qualifying payment as invoice face value times one minus the discount fraction.
Use the discounted funding base
The simple-interest example assumes the entire discounted amount is borrowed for exactly the gap at the entered annual funding rate. The modeled difference subtracts that interest from the discount amount.
Distinguish the reported annual rates
Simple and effective annualized cost are separate conventions. The effective version assumes repetition of the gap factor. They do not replace the actual-horizon cash comparison.
Inspect actual contract conditions separately
Facility fees, availability, taxes, rounding, other financing and contractual constraints are outside this model. A positive modeled difference is not an automatic borrowing instruction.