Procurement Glossary
2/10 Net: Definition and meaning in payment transactions
November 19, 2025
2/10 Net is a widely used payment term in B2B business that grants buyers a 2% discount if they pay within 10 days. Otherwise, the full invoice amount is due within the agreed payment period. This condition has a significant influence on liquidity planning and cost optimization in Procurement. Find out below what 2/10 Net means, how it is applied and what strategic advantages it offers.
Key Facts
- 2/10 Net grants 2% discount for payment within 10 days
- Corresponds to an effective annual interest rate of over 36% if not utilized
- Improves supplier relationships through fast payment processing
- Significantly reduces the risk of default for suppliers
- Requires optimized liquidity planning in Procurement
Contents
Definition: 2/10 Net
2/10 Net is a standardized payment term under which buyers receive a 2% discount if they pay the invoice within 10 days.
Basic components
The notation follows a fixed pattern: the first figure (2) indicates the discount rate as a percentage, the second figure (10) defines the days for the discount period. "Net" means that the full amount is due after the discount period has expired.
- 2% discount for early payment
- 10 days payment period for discount
- Full payment after expiry of the discount period
2/10 Net vs. other payment terms
Compared to net terms without discount, 2/10 Net offers financial incentives for fast payment. Compared to prepayment, it reduces the buyer risk while at the same time improving liquidity for suppliers.
Importance of 2/10 Net in Procurement
This payment term enables strategic cost optimization through the use of cash discounts and at the same time strengthens the negotiating position with suppliers. However, the utilization requires precise accounts payable term optimization.
Methods and procedures
The successful implementation of 2/10 Net requires systematic processes for liquidity management and payment processing.
Cash discount calculation and valuation
The profitability of using the cash discount is assessed by the effective annual interest rate. At 2/10 net, this corresponds to an interest rate of around 36.7% per year.
- Formula: (discount% / (100% - discount%)) × (360 / (payment term - discount days))
- Comparison with current financing costs
- Assessment of the impact on liquidity
Automated payment processing
Modern ERP systems enable the automatic recognition and processing of cash discount terms. Payment runs are configured according to the optimal payment dates.
Supplier negotiations
2/10 Net serves as a negotiation tool to improve payment terms. Alternative conditions such as dynamic discounts can open up additional optimization potential.
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Important KPIs for 2/10 Net
Measuring the success of 2/10 Net strategies requires specific key figures to assess the financial and operational impact.
Cash discount utilization rate
This key figure measures the proportion of cash discount options used in relation to all available cash discount options. A high ratio indicates efficient payment processes and optimal use of liquidity.
- Calculation: (cash discounts used / available cash discounts) × 100
- Target value: >95% with sufficient liquidity
- Monthly monitoring and trend analysis
Effective financing costs
The comparison between the discount yield and alternative financing costs shows the economic efficiency of 2/10 Net utilization. With 2/10 Net, non-utilization corresponds to financing at 36.7% p.a.
Days Payable Outstanding (DPO)
The average payment term influences the liquidity effect of 2/10 net terms. Optimizing accounts payable terms maximizes the financial benefits while taking advantage of cash discounts.
Risks, dependencies and countermeasures
The use of 2/10 Net conditions entails specific risks that can be minimized by taking appropriate measures.
Liquidity bottlenecks
Early payments can lead to temporary liquidity bottlenecks, particularly in the case of high procurement volumes. Insufficient cash flow planning jeopardizes solvency.
- Implementation of robust liquidity forecasts
- Building up liquidity buffers
- Flexible credit lines as security
Missed discount deadlines
Organizational deficiencies or system failures can lead to cash discount deadlines being missed. This results in lost cost benefits and can put a strain on supplier relationships.
Dependence on supplier conditions
Unilateral changes to payment terms by suppliers can affect established financial plans. Payment terms should be contractually fixed and regularly reviewed to avoid unexpected changes.
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Practical example
A mechanical engineering company receives an invoice for 100,000 euros with 2/10 net terms. If payment is made within 10 days, the company saves a discount of 2,000 euros. Not taking advantage of the discount corresponds to financing at 36.7% annual interest. The company implements an automated payment run that prioritizes all invoices with discount terms and automatically settles them within the discount period if there is sufficient liquidity.
- Annual cash discount savings: 180,000 euros
- ROI of process automation: 450%
- Improving supplier relationships through punctual payments
Current developments and effects
Digitalization and changing market conditions are having a significant impact on the application and further development of 2/10 Net conditions.
Digital payment platforms
Modern fintech solutions automate cash discount optimization through AI-supported liquidity analyses. These systems automatically calculate the optimal payment dates and take cash flow forecasts into account.
- Automatic cash discount recognition and valuation
- Predictive analytics for liquidity planning
- Integration into existing ERP landscapes
Supply Chain Finance Integration
Supply chain finance programs add flexible financing options to traditional 2/10 net models. Reverse factoring enables suppliers to receive the discount benefits immediately.
AI-supported optimization
Artificial intelligence analyses historical payment patterns and automatically optimizes the use of cash discount terms. Machine learning algorithms forecast liquidity requirements and recommend optimal payment strategies based on company targets.
Conclusion
2/10 Net is a highly profitable financing option which, if used systematically, enables considerable cost savings. The effective annual interest rate of over 36% means that there is virtually no alternative to using cash discounts when liquidity is available. Modern automation solutions and AI-supported optimization maximize the benefits while minimizing operational risks. Companies should strategically integrate 2/10 Net terms into their procurement and financial planning.
FAQ
What exactly does 2/10 Net mean?
2/10 Net is a payment term that grants a 2% discount for payment within 10 days. After the discount period has expired, the full invoice amount is due. This term offers financial incentives for fast payments and improves the supplier's liquidity.
How do you calculate the profitability of 2/10 Net?
Profitability is assessed by the effective annual interest rate: (2% / 98%) × (360 / 20 days) = 36.7% p.a. This high interest rate makes the use of cash discounts almost always advantageous when liquidity is available, as alternative financing costs are significantly lower.
What are the risks with 2/10 Net?
The main risks are liquidity bottlenecks due to early payments and missed discount periods due to organizational deficiencies. Unilateral changes to payment terms by suppliers can also affect financial planning. Countermeasures include robust liquidity planning and automated payment processes.
How do you automate 2/10 Net payments?
Modern ERP systems automatically recognize cash discount conditions and configure payment runs accordingly. AI-supported solutions optimize payment dates based on liquidity forecasts and maximize cash discount savings while minimizing liquidity risks.
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