According to a recent article in FX-MM, late payments from large corporations to suppliers are on the rise — driven in part by the view from some treasurers that these late payments act as an interest-free loan for the buyer. But what if a buyer opted to have its suppliers receive their money as fast as possible?
Improved cash flow certainty for suppliers would allow them to reduce the prices they charge the buyer. Not only would suppliers be able to stop taking out the expensive loans, but greater certainty would allow them to invest back into their operations. They could reduce costs by investing in new equipment and/or automation to gain better economies of scale.
Outside of contributing to the overall health of suppliers, early payment strategies can offer tremendous financial upside to corporations as well. Many progressive finance leaders are embracing the tremendous financial upside of dynamic discounting. Today, technology is revolutionizing the procure-to-pay process, providing the requisite velocity and transparency to support dynamic discounting—where suppliers proactively offer early payment discounts on invoices awaiting payment. Leveraging dynamic discounting, forward-thinking finance executives can unlock the potential of their payables to recoup up to 2% savings on their annual spend, which can contribute millions to the bottom line!
“While dynamic discounting has been in existence for several years, today it’s fast becoming one of the key tools of today’s new breed of innovative CFOs who are discarding the traditional practice of holding onto cash and delaying payments, which has proven to deliver inadequate returns in today’s fast-moving and demanding economy,” says Nilay Banker, Inspyrus founder and CEO.
Offering the most innovative and comprehensive discount management solution on the market, Inspyrus Total Discounting, combines the best of traditional and dynamic discounting approaches along with invoice automation and a self-service supplier portal, allowing organizations to dramatically increase early-pay discounts and supplier adoption, as well as eliminate missed discounts.