Early payment discounts in Morocco: calculation and whether they pay

“2% if you pay within ten days instead of thirty.” The discount looks harmless. Set against the twenty days it buys, it represents an annualised cost of roughly 37% — a rate no bank would charge you. That calculation, and nothing else, should decide whether you offer a discount or take one.

1. The formula, and why it changes everything

A settlement discount works like a loan: you give up a percentage in order to have the money sooner. The only figure comparable to a bank rate is the annualised one.

1. Take the discount rate offered, say 2%.
2. Divide it by the amount actually paid, so 2 divided by 98.
3. Count the days gained: from thirty days to ten, you gain twenty days.
4. Scale to the year: multiply by 365 divided by 20.
5. The result, here about 37%, is the annual cost of that discount.

The second line is the one people skip. The 2% is not on the full price but on what you actually hand over: you pay 98 to settle a debt of 100. That is a return of 2 on 98, not 2 on 100, which makes the deal slightly better still for the payer.

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2. A few worked cases

The most common terms produce annualised rates that almost always surprise the person offering them.

Terms offered	Days gained	Approximate annualised cost
1% at 10 days instead of 30	20	about 18%
2% at 10 days instead of 30	20	about 37%
2% at 10 days instead of 60	50	about 15%
3% at 10 days instead of 30	20	about 56%
1% for cash instead of 90	90	about 4%

Comparing the second and third lines is instructive: it is the same 2% discount, and the cost doubles depending on the term it replaces. A discount therefore has no value in itself; it only has value relative to the delay it shortens.

3. Whether to offer one

On the selling side, the question is not “does this speed up collections” — obviously it does — but “at what price, compared with other ways of funding the business”.

• Compare it to your real cost of cash: If your overdraft or short-term credit costs less than the discount’s annualised rate, the discount is the more expensive option.
• Target it, do not generalise: Offering a discount to customers who already paid on time is a pure giveaway: you are paying for behaviour you were getting for free.
• Look at who takes it up: Solid, well-run customers are the ones who take discounts. Risky customers pay late and take nothing: the discount does not improve the receivables that worry you.
• Treat the cause first: If the problem is your own invoicing delay, a discount does not fix it. Invoicing faster costs nothing, unlike a discount.

The third line is the most counter-intuitive and the most important: a discount speeds up payments from those who already paid properly, and leaves the difficult receivables untouched — those belong to receivables control.

4. How it is recorded

A settlement discount is not a reduction of the sale or purchase price: it is a financial transaction, and it is recorded as one.

1. A discount you grant a customer is a financial cost, separate from turnover.
2. A discount you obtain from a supplier is financial income, separate from the purchase account.
3. The sale or purchase stays recorded at its original amount: the discount does not change it.
4. It is recognised when it is earned, that is on early payment.
5. Its VAT treatment is settled with your accountant according to the invoice terms.

The third point is what distorts margins when handled wrongly. Netting the discount off the purchase or sales account makes purchase price and turnover incomparable from one period to the next, as noted in the purchase entry.

Mistakes to avoid

• Comparing a settlement discount percentage with a trade discount.
• Calculating the rate on the full price rather than the amount actually paid.
• Forgetting to annualise and concluding that 2% is modest.
• Offering a discount to customers who already paid on time.
• Netting the discount off the purchase or sales account.
• Using a discount to compensate for an over-long invoicing delay.

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Frequently asked questions

How do I calculate the real cost of a discount?

Divide the rate by the amount actually paid, then scale to the days gained over a year. For 2% at twenty days: 2 divided by 98, multiplied by 365 over 20, giving about 37% a year.

Should I take a discount offered by a supplier?

Almost always, if you have the cash and the annualised rate exceeds your cost of funding. A 2% discount at twenty days is a return that is hard to find elsewhere.

Does a discount really speed up collections?

It speeds up those of customers who already paid properly, and has almost no effect on difficult receivables. It improves cash flow without reducing customer risk.

How is a settlement discount recorded?

As a financial transaction: a financial cost when you grant it, financial income when you obtain it. The sale or purchase remains recorded at its original amount.

Does BelloPOS handle settlement discounts?

BelloPOS records sales, payments and their dates from the free Lite licence onward, which lets you measure your actual delays. Calculating whether a discount pays, and recording it, is done with your accountant.

What to take away

A discount is judged on its annualised rate, never on its headline percentage. Take the ones offered to you if your cash allows; grant one only if your cash costs more than the calculated rate, and target slow payers rather than those who already paid. And check first that the problem is not simply your own invoicing delay.

Sources

The figures and rules quoted above come from these pages, read on the date given in the article.

• Moroccan Tax Administration, 2026 General Tax Code
• Ministry of Economy and Finance, General Code of Accounting Standardisation, read 1 September 2026

Read next

Other practical guides on the same subject:

• Tracking customer receivables and supplier payables in Morocco
• Recording a purchase in Morocco: a complete worked example
• Invoice payment terms in Morocco: due dates, deposits and delay
• A 12-month cash-flow plan for Morocco: model and scenarios