2015 Report On Dynamic Discounting

By iPayables | October 12, 2015

The power to retain and take advantage of early payment discounts should be a primary objective for all accounts payable (AP) organizations. It has the potential to offer companies impressive returns on cash, making it a valuable source of time and resources.

Is your business continually depending on slow and outdated accounts payable manual operations? Isn’t it time to acknowledge the fact that you are not just hindering your own revenue potential, but also the profits of suppliers who could help turn your department into a profit center?

Capital Options for AP Departments

A number of industry studies suggest that the adoption of invoice receipt and AP automation significantly lowers confirmation times and gives AP departments more of a chance to retain early payment discounts. Yet, the revenue which is linked exclusively to accounts payable automation is rather insignificant in comparison to the massive returns which can be reaped with dynamic discounting strategies and resources. The question then is, why are so few businesses currently utilizing dynamic discounting resources?

Dynamic Discounting Options

The reality is that many of these enterprises are suffering from a lack of market awareness. They might have heard of the term ‘dynamic discounting,’ but they tend to struggle when it comes to fully understanding its implications.

It is also the case that some businesses shy away from dynamic discounting strategies, because they are anxious about producing a balanced cash flow to regularly offer discounts to suppliers. The good news is that dynamic discounting and electronic invoicing providers can often provide a whole wealth of different funding avenues.

Solutions for Supply Chain Financing

The funding behind dynamic discounting can usually be found in capital from the buyer. With supply chain financing, this opens up the opportunity for payment to competitive offers, enabling banks and third parties to get involved. Third party involvement is gradually increasing in popularity as more businesses learn about the available returns and reduced risk.

At the moment, only about 1-10% of the suppliers affiliated with individual businesses provide an early payment discount. This could be due to a multitude of different factors, but most likely is because suppliers are discouraged if they start to receive delayed payments from the buyers. Yet, with the option to leverage supply chain financing and bring in rapid returns, an increasing number of buyers are convincing suppliers to implement dynamic discounting.

Capital Solutions for Electronic Invoicing

The last piece of the puzzle for a successful working capital method and a lucrative supply chain is E-invoicing. The clear and cohesive regulation of payments is absolutely essential for modern businesses and one of the most common objections with outdated payment strategies is missed discounts.

In order to prevent missed payments, it is first necessary to understand that effective payment regulation and discount retention are very closely linked. The most forward thinking enterprises are the ones who realize the value in tightening their interactions via the use of Accounts Payable Automation. Essentially, AP automation enables payment time to be been cut in half.

Making the Decision to Invest in Efficiency

These days, there are plenty of opportunities for modern businesses to utilize better cash flow resources to boost the retention rate for discounts and also soothe AP based issues like lengthy approval delays. Bottom line is dynamic discounting and E-invoicing are proven methods to greatly improve financial flexibility.

 

 

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