Real-time ACH boosted by dynamic discounting

Sean Van Gundy, Managing Director, Working Capital Advisory for C2FO, shares his perspective on the biggest opportunity in payments with Payments Journal, “Faster Than Real-Time ACH: The Trillion-Dollar Opportunity in Accelerated Payments.

A growing number of businesses are benefitting from the adoption of real-time ACH, which reduces transaction times by up to three days.  This enables businesses to realize same-day – and eventually real-time – payment processing.

Even greater benefits can be gained by using alternative financing platforms that compress the period between invoice approval and payment dramatically, thereby shortening payment cycles in supply chains.

Given that such cycles can extend beyond 100 days, shortened payment terms provide enormous benefits to individual suppliers and the economy in terms of growth and financial stability.

As an example:

Real-time ACH boosts payment speed by three days.

Without real-time ACH, businesses that agreed to 60-day terms would typically access their funds in 63 days. Real-time ACH reduces this to just 60 days by eliminating the three-day transaction processing window.

By using an accelerated payment solution and the future state of real-time ACH, however, the time from invoice approval to processed payment can be reduced to a mere two days.

C2FO offers dynamic discounting solution with flexibility across many variables, including the rate that is desirable for the supplier, and which invoices to be paid earlier. This provides suppliers with better control over cash flow than other options.

C2FO is unique in the industry as it offers a working capital marketplace where businesses upload invoices with a target return, while suppliers request early payment of their invoices at a rate of their choosing from all of their participating customers on a single platform.

Should C2FO and other alternative financing platforms make such compressed cycles the default, the liquidity implications are staggering. For example, the estimated cash stockpile of non-financial U.S. corporations is $1.68 trillion.

By implementing these kinds of dynamic solutions, businesses can augment their supply chains and gain a competitive advantage.


Related Links

Read the article in Payments Journal
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