Dynamic Discounting has been getting a lot of traction lately as more organizations are getting creative as they look for ways to optimize their cash positions. Traditional dynamic discounting is where the buying organization offers selected suppliers to pay early on some or all of their invoices in exchange for a discount off of the stated invoice amount.
So for instance ACME Co. may owe ABC Inc., $2500.00 on an invoice which comes due for payment in 20 days. ACME offers ABC to pay them tomorrow, 19 days early, in exchange for discounting the payment by $150 for a net of $2350 to ABC. If ACME has the cash and is looking for a better return than other short term investments and ABC needs the cash or better terms than other financing options, then it makes sense for the offer to be accepted. It this scenario it is a win win for both the buying company and its supplier.
Traditionally dynamic discounting is offered through a vendor portal where the supplier logs on and sees what offers they may have and either accepts or rejects. While this is a good system and one ICG offers, it is generally reactive in nature and the buying company must engage in on-boarding activities to make the suppliers aware and get them to log on to the system regularly.
In addition to this traditional dynamic discounting system, ICG now offers this same value added function in a service model. The same savings, investment, and cash benefits apply but instead of a reactive, systems based solution ICG offers a service that is proactive and requires no up front investment for the buying company or their suppliers! ICG helps you identify suppliers and invoices likely to yield a successful offer and helps you establish a discount that works for your cash needs.
ICG will contact those select suppliers on your behalf and make them a discount offer. Accepted offers are transmitted back to you for payment. You only pay for successful offers so there is no risk and no fixed costs. also there is little or no IT involvement and no hardware or software needed so resource or capital expenditure issues will not be deal breakers. This service is also a great “proof of concept” or ramp up to implementing a more traditional in-house, portal based system. Something to think about!
Contact ICG for more information.