Outside the margins: the right dynamic discounting program offers more than just financial benefits

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As companies look for ways to gain a competitive edge, many look to their supply chain and procurement teams. Dynamic discounting is one sure path to margin improvement, but the right solution offers more benefits — for you and your supply chain both.

Offset the impact of terms standardization on your suppliers

Many corporates are switching vendor payment platforms to a single payment system for efficiency, and implementing payment terms standardization. Other companies may opt to push vendor payments to a longer schedule to better manage cash and be more in line with industry standards.

For both approaches, adding a dynamic discounting program helps suppliers who need to be paid early for working capital to grow their business, fund inventory, or innovate their product line. As an optional program for suppliers, C2FO acts as a working capital  “safety valve.”

“To me, this underscores that best practices really should be tailored through the lens of your unique business and what’s right for you and your supply chain,” says C2FO Managing Director and retail expert Amanda Mathes.

The right dynamic discounting solution should offer:

  • A completely automated program to improve margins
  • No requirement to change in terms, contracts or negotiations
  • Ability to influence which suppliers are eligible
  • A marketplace model that provides early payment to more suppliers than other solutions

Improving efficiency for your team

Let’s face it, managing all of your supplier relationships is mission critical to the business but it’s also time and labor intensive. The right dynamic discounting should alleviate this demand on your team, not add to it.

For procurement and accounts payable teams who have had to manage early payment requests on a vendor-by-vendor basis, dynamic discounting can allow suppliers to self-service these requests. The right partner will also handle supplier adoption and ongoing support to make the solution turnkey.

For example, says Joe Vaiente, Senior Director, Accounting with Albertsons, his team receives a daily email from C2FO about cash management and supplier payments.

“It takes us 10-15 minutes a day to review, whereas before it was a vendor-by-vendor process,” he said.

The right dynamic discounting solution should include:

  •       100% of supplier onboarding effort
  •       Multi-lingual supplier support team with financial knowledge
  •       Best-in-class program to address the entire lifecycle of suppliers
  •       Supplier training and ongoing support with multiple touch points
  •       Data-driven program to help suppliers get the most benefit from the program
  •       Account and market management services to ensure you meet your company goals

Improving the strength of your supply chain

On the surface, discounting may seem more of a benefit to corporates than their suppliers. But not all discounting options are equal. One of the most important attributes of an effective dynamic discounting solution is that it should offer your suppliers flexibility, control, and affordable working capital.

C2FO, for example, improves your supplier relationships by providing on-demand access to working capital at rates they choose and are more affordable than their existing options. Suppliers are able to choose when they want to participate and which invoices they would like paid early. Ninety-eight percent of suppliers who use C2FO report they are “very satisfied” with the value C2FO offers their business, according to our 2017 Global customer satisfaction survey.

“Cash flow and inventory are pretty much the number one and two for most important things. C2FO is a dependable way we can leverage current sales. C2FO is a good way for us to move some cash. It’s more competitive than getting a loan from a bank. It’s just another tool we can use to diversify the options we have,” says Jack Caruso, Project Executive for Grape Solar.

“I am very happy with C2FO, which has had a tremendous impact on our company’s capital needs. We need money to fund R&D and we don’t want to use our line of credit,” says Michael Pliskin, Owner, MedM technology company.”

The right dynamic discounting program improves more than just your margins. It should offer your suppliers an added tool to control cash flow and manage their businesses while reducing financial supply chain risk for you.

Dynamic discounting programs should reduce supply chain risk by:

  •       Providing suppliers a way to control cash flow on demand
  •       Creating access for suppliers to affordable working capital
  •       Offering suppliers flexibility and control without paperwork or delays
  •       Supporting a collaborative relationship between you and your suppliers

In summary

As companies look for ways to gain a competitive edge, many look to their supply chain. Supply chains hold the key to cut costs, improve efficiencies, and deliver products faster to customers. But the increased pressure on suppliers has associated risks. To succeed, companies must find a way to improve supply chain strength even as they demand more from suppliers.

With the right dynamic discounting solution, procurement teams can strengthen their supply chain, improve margins and reduce costs, and still offer a win-win program that benefits suppliers.