The discount decision

Terms of 2/10, n/30 mean 2 percent off if paid inside 10 days, the full amount due inside 30. Skipping the discount to hold onto cash a little longer is really just borrowing that cash — at whatever rate the discount implies.

Turn a small percentage into an annual rate and it stops looking small. Two percent for 20 extra days works out to well over what a bank would charge, so paying early and taking the discount is almost always the better trade.