21.05.2025
Early payment discounts mean hard cash. However, time and time again, companies fail to make use of the deduction. Why? The invoices are entered into the system too late, approvals take too long, and deadlines for getting the discount have already passed. If you digitize invoice receipt in combination with an e-invoicing solution, you’ll be able to benefit systematically from early payment discounts, giving you real savings potential.
For buyer-side companies, early payment discounts are often an underestimated way to make immediate savings. If you pay invoices early, you can save money. When it comes to large purchase volumes or recurring expenses in particular, small discounts of this kind can add up to substantial sums. However, early payment discounts also mean the company pays sooner, which means liquidity is tied up earlier. This is why it’s a good idea to weigh up releasing the funds early against the savings made. Taking advantage of early payment discounts pays off when the saving is greater than the financing costs of settling the payment later on, and if releasing funds early will not lead to financial difficulties. Careful cashflow planning is essential to using early payment discounts strategically.
We come across price reductions in all shapes and sizes in day-to-day business. While traditional discounts aim to generate more sales or to reward customer loyalty, early payment discounts have a different purpose:
Early payment discounts reward prompt payment, and therefore efficient company processes. Only those who pay on time benefit. This makes early payment discounts an indicator of how effective accounting is.
The discounts therefore not only represent a financial advantage, they are also a measure of the efficiency of internal processes.
In Switzerland, there is no legal obligation to grant or make use of early payment discounts. Companies are essentially free to draw up their payment conditions as they see fit. In practice, discounts of 1 percent to 3 percent in the space of 10 days (rather than the standard, normal payment period of 30 days) are commonplace.
Despite the clear financial advantage of these discounts, companies often fail to make consistent use of them. The reasons are mostly structural in nature and due to inefficient processes that have not yet been digitized:
The result: companies don’t benefit from discounts, meaning measurable savings potential is wasted.
If you want your company to make consistent use of early payment discounts, you’ll need digital support. Modern ERP systems automate the relevant steps and make punctual payments realistic:
PostFinance’s B2B e-invoicing provides the basis for a consistently digital, automated invoicing process: it transfers invoices straight to your ERP system in a structured manner, without any media interruptions or delays. By switching to B2B e-invoicing, companies can process their invoices faster and consistently meet payment deadlines. This pays off: by making use of early payment discounts alone, companies can quickly save large sums.
In Switzerland, early payment discounts are calculated after VAT.
Original invoice amount |
100% |
CHF 10,000.00 |
|---|---|---|
Plus 8.1% VAT |
8.1% of 10,000 = 810 |
10,000 + 810 = CHF 10,810.00 |
Minus 2% early payment discount |
2% of 10,810 = 216.20 |
10,810 – 216.20 = CHF 10,593.80 |
New invoice amount |
with early payment discount applied |
CHF 10,593.80 |
Early payment discount conditions should be clearly and unambiguously defined in contracts, General Terms and Conditions, or directly on the invoice itself. Clear and precise wording such as “2 percent early payment discount on payments made within 10 days, payable net in 30 days” can help avoid misunderstandings and disputes. If (in exceptional cases) no discount is granted, we recommend adding the note “No early payment discount”.
If a discount is granted, it must be entered in accounts as reduced revenue. If the customer makes use of the discount, this reduces purchase costs, which will classify it as a reduced expense. Only a clean accounting entry can guarantee tax transparency.
The Swiss Code of Obligations does not contain any specific regulations on early payment discounts, but relevant ordinances and established industry standards must be taken into account in their application – especially when it comes to international business transactions.
If the deadline for an early payment discount is missed, normal payment conditions, including possible reminder processes, automatically apply.
An early payment discount is a reduction in price granted by suppliers if an invoice is settled within a certain time period (usually 10 days).
If the supplier receives payments quicker, it can improve its liquidity, reduce the costs of goods or services for the buyer, and in turn make substantial savings. Even a small percentage discount can lead to major overall savings when it comes to large purchase sums.
A company offers a customer a 2 percent discount for paying within 10 days rather than the normal 30 days. Specifically:
If the company pays the invoice within 10 days on the buyer’s side, they can apply a discount of 200 francs. Instead of 10,000 francs, it pays 9,800 francs.
