What does 2/10 net 30 mean?

The customer may take a 2% discount for paying within 10 days. Otherwise the full amount is due in 30 days. For the seller, giving up 2% to be paid 20 days sooner works out to roughly 37% as a simple annual rate.

What is days sales outstanding (DSO)?

The average number of days it takes customers to pay you. Divide what you are owed by your annual invoiced sales and multiply by 365.

Can I charge late fees on unpaid invoices?

Often yes, when the fee is set out in your contract or terms before the work begins. Rules and limits vary by state, so check yours before adding one.

WithFunded › Academy › Manage your cash flow

How to get paid faster

Money your customers owe you is cash you have earned and cannot use. Shortening that wait is often the cheapest financing a business can get.

WithFunded Academy · Lesson 16 of 16 · 3 min read · Updated November 2026

Key takeaways

Measure how long customers take to pay. You cannot shorten a wait you have not measured.
Deposits, same-day invoicing, and easy payment options speed things up at no cost.
An early-payment discount is financing you provide. Price it before you offer it.
When customers will not pay faster, factoring or a line of credit can close the gap.

Start by measuring the wait

Days sales outstanding (DSO) = receivables ÷ annual credit sales × 365

A business with $90,000 owed to it and $600,000 a year in invoiced sales is waiting about 55 days to be paid. Bring that down to 40 days and roughly $24,658 moves from customers' accounts into its own, for good.

Six fixes that cost nothing

Take a deposit before starting, and bill larger jobs in stages.
Invoice the day the work is done, not at month end.
State the due date and terms on every invoice, and agree them before the work starts.
Make paying easy. Offer a pay-now link, card, and bank transfer.
Send reminders on a schedule: a few days before the due date, on it, and a week after.
Call about overdue invoices. A friendly call gets results that a fifth email does not.

If you plan to charge late fees, put them in your contract and check your state's rules first.

What an early-payment discount really costs

Terms like "2/10 net 30" give the customer a 2% discount for paying in 10 days instead of 30. On a $10,000 invoice you give up $200 to be paid 20 days sooner. As an annual rate, that is about 37.2%. At 1% it is about 18.4%.

For comparison, carrying the same $10,000 for 20 days on a line of credit at 19% APR, the middle of our representative band, would cost about $104 in interest.

Calculator

Early-payment discount calculator

Offering a discount for fast payment is a form of financing. Here is what it costs as an annual rate.

Invoice amount$ Discount for paying early% Pay within (days) to earn it Normal due date (days)

Annualized cost of the discount37.2%

Discount you give up: $200
Cash you receive: $9,800
Days sooner you are paid: 20

Simple annualized rate, not compounded. Compare it with what a line of credit would cost you for the same days. Estimates for learning only. Not an offer, a quote, or financial advice.

A discount can still be worth it when the alternative is a missed payroll or a customer who would otherwise pay in 60 days. Just decide with the number in front of you.

When customers will not pay faster

Invoice factoring advances most of an invoice's value now and collects from your customer later, for a fee on the invoice.
A line of credit covers the gap while you wait, and you pay interest only on what you draw.

Use a 13-week cash flow forecast to see which weeks need the help.

Common questions

What does 2/10 net 30 mean?: The customer may take a 2% discount for paying within 10 days. Otherwise the full amount is due in 30 days. For the seller, giving up 2% to be paid 20 days sooner works out to roughly 37% as a simple annual rate.
What is days sales outstanding (DSO)?: The average number of days it takes customers to pay you. Divide what you are owed by your annual invoiced sales and multiply by 365.
Can I charge late fees on unpaid invoices?: Often yes, when the fee is set out in your contract or terms before the work begins. Rules and limits vary by state, so check yours before adding one.

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Rate inputs are as of November 2026: a representative 8%–30% APR band for non-bank term financing and a 7.00% prime rate. Worked examples are WithFunded calculations.

Educational content. WithFunded Academy lessons are general information for small-business owners. They are not financial, legal, or tax advice, and they are not an offer or a commitment to lend. Figures are representative examples and WithFunded calculations, not quotes. WithFunded and Big Think Capital are a financing marketplace; we are not the direct lender and do not guarantee funding, approval, rates, or terms. Actual rates, fees, payments, and terms are set by the funding lender and depend on your business, credit, and the product. Where required by state law, the lender provides cost-of-financing disclosures before any agreement is signed.