Save significant cash while while benefiting your vendors
In the unstable economic times we are are currently in Dynamic Discounting provides an efficient way to optimize cash flow in a highly dynamic, real-time environment. This valuable tool helps increase your companies cash flow and bottom line while also providing a much needed early cash payment to selected vendors. In some cases this early cash infusion for your vendors can help keep them healthy as they struggle in tough economic times.
What is dynamic discounting? Dynamic Discounting is a vendor portal (supplier portal) based program set up by the buying company that establishes a process by which buyers (customers) and sellers (suppliers) can alter the standard terms of payment “on the fly” in a highly dynamic, flexible, real-time environment. For instance, the buying company can offer a significantly higher discount for paying some or all invoices many days before the due date and a smaller discount for paying invoices as the payable ages closer to the standard due date. Based on the cash needs, borrowing costs, and other factors for the vendor they may choose some invoices for early payment while allowing others to go through their normal payment processes. The dynamic nature of this program means the amount of cash, discount percentages, and invoices discounts offered on can be changed to fit your current cash strategy and to maximize the return on your short term cash investment. For instance, the discount offered can be changed as the cash flow position of the buyer changes.
One key element to implementing a successful dynamic discount program is having an efficient accounts payable (AP) process. If cycle times for getting an invoice through your AP process and into your ERP are too long a dynamic discount program will not be very effective. If you have a slow or inefficient AP process you may want to look at implementing an AP Automation solution to enable a dynamic discounting program in your organization.
Contact ICG Consulting to learn more about Dynamic Discounting and how ICG can help you to be more efficient and improve your cash position.