Early settlement discount

DebbieM Registered Posts: 13 New contributor 🐸

I wondered if anyone has a formula for calculating what the cost of giving a settlement discount is.

I'm looking to use it as an incentive for a new customer to pay part up front and part within 7 days of completion of a project.

For example I need to calculate the interest we will gain by having the money in our bank from day 7 rather than waiting until day 30, so that I can calculate what percentage discount I can offer and how much gross profit will be lost.




  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
    Try this [thread=25739]interesting link[/thread]
  • oakley
    oakley Registered Posts: 73 Regular contributor ⭐
    At the moment with interest rates so low you could save the trouble of working out the formula as interest received will be just over 0, so the cost will be the discount given.

    maybe not the answer you are looking for but you could spend more time doing other things.
  • Yestin
    Yestin Registered Posts: 83 Regular contributor ⭐
    I agree...also depends on the kind of invoice values we are talking about, if not much then really no point in working it out...like the above post said you can do other things....like a chocolate run!! Yorkie for me please!!
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