Dynamic Discounting Opportunities

Enabling dynamic discounting can be a key initiative to improve cash flow management, minimize financial risk in the supply chain as well as enhance and even repair supplier relationships.

The global credit crunch has directly impacted many supply chains and many organizations have taken extraordinary measures to ensure positive cash balance such as delaying payment, enforcing collection terms, curtailing inventory and even selling invoices (factoring) to keep operations going. Unfortunately, all four tactics are shortsighted and unsustainable.

Early payment vs. dynamic discount benchmark
Dynamic discounting is sustainable in the long run, yet yields returns from day one. It provides working cash management benefits for both buyers and sellers and allows both parties to tap into the €2 trillion global factoring market. For buyers savings can amount to nearly 25% of annual spend, and suppliers can drastically lower DSO while improving their working capital.

A first step towards implementing a dynamic discount strategy is to automate the AP process. Automating the AP process will tangibly increase AP process efficiency; increasing control, transparency and touch-less invoice processing rates. This increase in efficiency and transparency will not only lead to advantages through process best-practice but also enable organizations to capitalize on the discount opportunities that often lie hidden in lagging manual AP processes.