Two deadlines, two meanings
An invoice with a cash discount states two deadlines. The discount period says by when you must pay to receive the deduction. The payment term says by when you must pay the full amount at the latest. Missing the discount period only costs you the reduction. Missing the payment term risks default.
When does the discount period start?
German law does not define when the discount period starts. The agreement alone is decisive. Three variants are common:
- from the invoice date: “2% discount for payment within 10 days of the invoice date”
- from receipt of the invoice: the period only runs once the invoice has reached the customer.
- with a fixed date: “2% discount for payment by 15 October”. This is the clearest option.
If nothing is agreed, disputes arise easily. Sellers should therefore word the period unambiguously, ideally with a date.
Is the payment on time?
Whether it is enough to order the transfer within the period, or whether the money has to reach the seller within the period, also depends on the agreement and is not always clear. You are on the safe side if you transfer early enough for the amount to be credited within the discount period. For transfers within the euro area this is usually the next business day, and with instant transfers it is immediate.
Deadline missed: may I still deduct the discount?
No, at least not without the seller's consent. A cash discount is a conditional reduction. If the condition is not met, the entitlement lapses. Deducting it anyway means only part of the invoice has been paid. The rest remains open. Many sellers chase this remainder; with small amounts some waive it as a goodwill gesture. There is no right to that.
Conversely, the seller can claim back a discount taken without justification. If the remainder is not paid, the normal rules for outstanding claims apply, up to default interest. You can calculate it with the late payment interest calculator.
How long may the payment term be?
Payment terms between businesses can in principle be freely agreed. § 271a of the German Civil Code (BGB) sets a limit, however: an agreement under which the creditor can only demand payment of a claim for consideration more than 60 days after receipt of the goods or services is only valid if it was made expressly and is not grossly unfair to the creditor. Stricter limits apply to public contracting authorities. Inspection or acceptance periods of more than 30 days are subject to the same requirements.
If there is no payment term at all, a claim is in principle due immediately. For claims for consideration, default occurs under § 286 (3) BGB at the latest 30 days after the due date and receipt of the invoice; for consumers only if the invoice points out this consequence.
Wording discount terms properly
For sellers: the clearer the condition, the fewer queries. Good wording contains the discount rate, the start of the period or a fixed date, and the payment term. For example:
“Payable by 31 Oct 2026 without deduction. For payment by 14 Oct 2026 we grant a 2% discount (€23.80, amount payable €1,166.20).”
Stating the discount amount directly saves the customer from calculating and avoids rounding differences. In addition, under § 14 (4) sentence 1 no. 7 UStG a reduction of the consideration agreed in advance has to be on the invoice anyway.
Which terms are favourable for buyers?
For buyers not only the discount rate matters but also the gap between discount period and payment term. The shorter the gap, the higher the effective annual rate of the supplier credit and the more worthwhile it is to pay early. 2% at 14 / 30 days corresponds to about 45.9% per year, 2% at 10 / 60 days only to about 14.7%. More in the article Supplier credit.
With the cash discount calculator you can move the discount period and payment term and immediately see how the annual rate and the advantage change.