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Selling in installments or for cash

Compare what the business receives, in today’s money, from a cash sale, a single card payment or an interest-free installment plan, collected monthly or advanced. Find the largest cash discount that still pays off.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Nov 1, 2026

Example: a $1,200 sale the customer wants to pay in 6 interest-free installments.

The sale
Card fees

Without an advance, each installment reaches your account 30, 60, 90… days after the sale.

Money over time

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—Maximum discount for paying now
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What you receive in today’s money

Net amount of each way to get paid, after fees and brought to present value at the cost of capital.

Tap the chart to see the values.

Break-even discount by number of installments

Cash discount that leaves the same present value as installments, from 2 to 12, at the fees entered.

Tap the chart to see the values.

When the money comes in

Amounts net of fees, in each month after the sale.

Next step

Take this page’s results to another calculator with the fields already filled in.

Take the installment cost to the pricing calculator →Simulate receivables financing →See the buyer’s side →

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

Cash = P × (1 − cash fee); single payment = P × (1 − single fee) ÷ (1 + c)^(days/30)
Installments = Σ [P × (1 − installment fee) ÷ n] ÷ (1 + c)^k, k = 1…n; c = monthly cost of capital
Advanced = Σ [P × (1 − installment fee) ÷ n] × (1 − advance rate × k)
What to charge (optional): cash = X ÷ (1 − cash fee); single = [X × (1 + c)^(days/30) + fixed fee] ÷ (1 − single fee); n installments = (X + fixed fee) × n ÷ [(1 − fee) × Σ factor], factor = 1 ÷ (1 + c)^k (monthly) or 1 − advance rate × k (advanced)
Maximum cash discount = 1 − max(installments, advanced) ÷ cash

Assumptions and limits

  • Equal monthly installments, the first 30 days after the sale; advances discounted at a simple rate per month advanced; constant cost of capital. The chart by number of installments uses the same installment fee for every term.
  • Terminal rental, chargebacks, defaults, sales taxes and fees beyond those entered are not considered.

Official sources and references

Frequently asked questions

What is this calculator for?

It shows a business owner what each way of getting paid is really worth (cash or transfer, a single card payment, installments and advanced installments) and the largest cash discount that still pays off. It is the seller’s side of the buy now or pay in installments question.

How do I read the example result?

On a $1,200 sale in 6 installments with a 4.5% fee, the $191 net installments are worth $1,106.94 today at a 1% monthly cost of capital; advanced, $1,085.84. So a cash discount of up to 7.8% still pays off. Against a single card payment, the break-even discount is 3.0%.

What is a card processing fee?

The percentage the payment processor keeps from each card sale. A single payment often costs 2% to 3.5%, and installment or pay-over-time plans cost more, rising with the term. Check the rate for each option on your processor’s statement or dashboard.

How does the advance rate work?

It is charged per month advanced on each installment: advancing an installment due in 4 months at 1.5% costs 6% of it. That is why advancing long plans is expensive. In the example, advancing all 6 installments costs about $60.

What should I use as the cost of capital?

The rate the business would pay to borrow working capital if it needs cash, or the after-tax return on its cash if it has spare money. The higher this rate, the less future installments are worth and the larger the cash discount that pays off.

Can I offer a cash discount and still offer installments?

Yes. The calculator shows the limit: below the break-even discount, the business gains every time a customer switches to paying now. Check local rules on surcharges and price differences by payment method, and state the cash price clearly.

What are the limits of this calculator?

The chart uses the same installment fee for every number of installments, and it ignores chargebacks, terminal rental, sales taxes and defaults. For credit and working capital decisions, talk to your accountant.

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Selling in installments or for cash: what the business really receives

Interest-free installment plans help sell, but they cost the seller in two ways: the processing fee, which is higher for installments, and the waiting time, because the money arrives one month at a time. To compare with a cash sale, everything has to be brought to today’s value.

The math

On a $1,200 sale in 6 installments with a 4.5% fee, each net installment is $191. Discounted at a 1% monthly cost of capital, the six installments are worth $1,106.94 today. Advancing them all at 1.5% per month advanced brings in $1,085.84. The best installment option is therefore worth 7.8% less than a fee-free cash sale.

The break-even discount

That 7.8% is the maximum cash discount: up to it, a discount for paying by cash or bank transfer leaves the business with as much money as the installment plan, or more. A 4% discount, for example, attracts customers who can pay now and still improves cash flow.

Advance or wait

Advancing makes sense when the advance rate is below what money costs the business, or when cash is short. If the business has spare cash, waiting for the installments is usually cheaper.