Most finance teams know exactly what their idle cash earns. Very few know what the same cash could earn by paying their subs a few weeks early. The gap is bigger than you'd think, and you can run the numbers on your own payables below.
Net 30 is a decision, not a law of nature
Paying subs and trades on net 30 keeps cash in your account for an extra few weeks. That float is worth something: parked in a treasury or money-market account, it earns interest until the payment goes out.
But your subs are carrying that same gap on the other side. Many of them would happily take a little less to get paid now instead of in three weeks. When you let them, the discount they give up is money you keep. The question for a CFO is simple: does that discount earn more than the cash would have earned sitting still?
The math on one invoice
Take a $10,000 invoice on net 30. Your sub chooses early pay on day 7 for a 2% fee. You pay $9,800 on day 7 instead of $10,000 on day 30.
That means you put $9,800 to work 23 days sooner and earned $200 for it. That's a 2.04% return in 23 days, or about 32% a year if you annualize it.
FieldPay charges your business 1% of every payout paid early, so on a 2% fee you keep 1%. After our fee, your return is still about 16% a year. Compare that with about 4% on cash in treasury.
| $10,000 invoice, net 30, paid early on day 7 at a 2% fee | |
| Early-pay discount you keep | $200 |
| FieldPay fee (1% of the payout) | −$100 |
| Interest you give up ($9,800 × 4% × 23/365) | −$25 |
| Net to your business | $75 |
Seventy-five dollars sounds small on one invoice. Across a month of payables it isn't: on $500,000 a month paid early, the same math adds up to about $45,000 a year.
Run your own numbers
Enter your monthly payables, how many your subs are likely to take early, your terms, and what your cash earns today.
Early pay vs. treasury calculator
| Paid early each month | $500,000 |
| Early-pay discount you keep | $10,000 |
| FieldPay fee (1%) | −$5,000 |
| Interest you give up | −$1,235 |
| Net to your business each month | $3,765 |
| Net to your business each year | $45,180 |
Yield is rarely the problem. Cash on hand is.
Run a few scenarios and you'll notice how hard it is to make early pay lose. At these terms, your fee only needs to clear FieldPay's 1% by a quarter of a point to beat a 4% treasury yield. Anything above that is margin.
The real limit is liquidity. Every dollar paid early leaves your account weeks sooner, so the question to answer is how much you can pay out early while staying above your minimum balance and covering everything else that's scheduled. The calculator shows that number as the extra cash you'll need on hand. Start with the subs and the amount you're comfortable with, and widen it from there.
Your subs choose, you set the terms
With FieldPay, you create a payout policy, such as net 30, and turn on early pay at a fee you choose, from 0% to 5%. Your subs see the fee before they confirm and decide payout by payout whether to get paid early. You pick whether an early payout goes out right away or on shorter terms, like net 7 or net 15.
Early pay isn't a loan. It's an early-payment discount on work you've already approved, with no credit check, no interest, and nothing for your subs to pay back. Subs who need the cash get it sooner. Subs who don't keep waiting for the full amount. Either way, you become the company that pays fast, which is how you keep the best subs calling you first.
Conclusion
Your cash is already earning something. The question is whether it could be earning more by going to the people who did the work. For most businesses that pay subs on terms, the answer is yes, by a wide margin. Run your own numbers above, and if they look like ours, we should talk.