Early Payment Discount Formula is a term used in business and finance to refer to the incentive companies offer customers when they pay their invoices before the due date. This formula typically involves reducing the original amount of the invoice by a percentage, usually between 2-5%, as a reward for being an early payer. As an example, if a customer pays a $1000 invoice 8 days before its due date, the company may reduce the amount of the invoice by 4%, resulting in a payment of just $960. By offering an Early Payment Discount Formula, companies can encourage customers to pay promptly and improve their cash flow.