| Quantity | Price | Credit Days | Rate (p.a.) | Interest | Effective/kg |
|---|---|---|---|---|---|
| 10,000 kg | 55/kg | 30 | 12% | ~5,425 | 55.54/kg |
| 25,000 kg | 48/kg | 45 | 14% | ~20,548 | 48.82/kg |
| 5,000 kg | 72/kg | 60 | 10% | ~5,918 | 73.18/kg |
In the steel supply chain, credit terms are a critical component of the total procurement cost. A seemingly small difference in payment terms can significantly impact margins, especially on high-volume orders. For example, buying 25 tonnes of HRC at 48/kg on 45-day credit at 14% p.a. adds over 20,000 in financing charges.
This calculator uses simple interest: Interest = Principal × Rate × Time, where Time is the credit period as a fraction of 365 days. The effective cost per kg includes this interest charge, giving you a true comparison basis when evaluating supplier quotes with different payment terms.
A 30-day credit at 12% p.a. adds approximately 0.99% to your material cost. For a 10-tonne order at 55/kg, that is roughly 5,425 in interest. Longer credit periods increase the effective price proportionally — 60 days at 12% adds ~1.97%.
In the steel trade, credit periods typically range from 15 to 90 days depending on the buyer-seller relationship, order volume, and market conditions. Large mills may offer 30-45 days to established distributors, while spot purchases are usually cash or 7-day payment.
When comparing quotes from different suppliers, the headline price per kg does not tell the full story. A supplier offering 54/kg on 7-day payment may be cheaper than one offering 53/kg on 60-day credit once financing charges are factored in. This calculator helps make apples-to-apples comparisons.