Why Software with a Service (SwaS) Makes More Sense

Combining a dynamic discounting program with a full-service offering will streamline implementation and improve cash returns for both you and your suppliers.

In recent years, enterprises have experienced an economic roller coaster — from supply chain disruptions to rising inflation, changing customer expectations and a credit crunch. This uncertainty means that many finance and treasury teams are looking for ways to optimize their balance sheets and improve cash flow.

It’s no surprise then that bank-led supply chain finance (SCF) has gained popularity. However, companies are also leveraging alternative financing solutions such as dynamic discounting programs via fintech organizations. These are buyer-initiated programs that use software to facilitate early payment discounts from your suppliers. Enterprises that offer such programs to their suppliers are realizing several benefits, including:

• More resilient, well-funded supply chains.
• Win-win terms that support stronger supplier relationships.
• Risk-free cash returns.
• Improved core business metrics, such as EBITDA.
• High supplier participation and more flexibility than traditional SCF.

If you’re in the market for a dynamic discounting program, you have most likely compared platform, technology, process and enterprise resource planning (ERP) details between solutions. Another important feature to consider is the level of service you and your suppliers receive when adopting a program.

Dynamic discounting programs that use a software with a service (SwaS) model can make the difference between the success and failure of your investment. What is SwaS and how can it help your business meet its financial goals when using dynamic discounting? 

What is SwaS?

Software as a service (SaaS) customers pay to access cloud-based software. Software with a service (SwaS) goes a step further, combining software with a full professional service. 

SwaS solutions offer dedicated account managers to give you in-depth support throughout the lifetime of the contract. This service enables a level of partnership that is not generally available through typical SaaS customer success teams. When done effectively, SwaS offerings feel like an extension of your team rather than as-needed external assistance. For dynamic discounting services, SwaS companies provide hands-on support for you and your suppliers to ensure that you are both using the program effectively.

How SwaS benefits your bottom line

A successful dynamic discounting program has many moving parts — from launching the software to encouraging participation, monitoring outcomes and supporting optimal performance. These processes are complex, especially if you have a global business and supplier network, and they require a significant investment in staff, time and resources to be done well internally. A SwaS provider can not only save you time and money in terms of program logistics but also help you and your suppliers maximize returns. Here’s how.

1. Frictionless program launch and maintenance

Your IT department might not have the resources to implement new dynamic discounting software efficiently. SwaS removes the burden of internal software implementation and maintenance by providing hands-on and even on-site launch and onboarding assistance. This ensures that the program goes live quickly and starts delivering value on day one. Additionally, SwaS teams can provide high-level security expertise as security standards evolve.

2. High supplier usage rates

Dynamic discounting programs are a two-way street: Supplier participation is essential for programs to deliver a return on investment (ROI) and provide all the benefits mentioned. However, getting supplier buy-in and supporting suppliers’ program usage is a very time-consuming and multifaceted process. 

SwaS programs such as C2FO’s Early Pay solution provide dedicated supplier relationship managers (SRMs) who help you navigate the various steps of supplier participation. For example, SRMs improve program adoption rates and offer support by:

• Educating suppliers about your dynamic discounting program before, during and after launch.
• Making multiple points of contact with suppliers to provide resources and encourage signups.
• Communicating appropriately with different supplier segments, including those with multilingual requirements or in various time zones.
• Providing working capital expertise so suppliers can optimize the program based on their size and financial needs.

3. Expert working capital advisory

To make the most of your dynamic discounting program, you must monitor its performance over time and adjust your strategy accordingly. If you use a market-based dynamic discounting system, optimizing your market’s price discovery is also vital for meeting key performance indicators (KPIs).

A dedicated account manager who is an expert in your dynamic discounting program — and well-versed in your business goals — can help you interpret program-generated data and make recommendations to enhance its performance. For example, C2FO’s Dynamic Supplier Finance program has a team of data scientists who collaborate with account managers and provide frequent reports. These professionals support your treasury, finance and accounts payable (AP) departments by:

• Suggesting how the program can maximize the value of your AP process and working capital.
• Advising treasurers on how to strategically balance days paid outstanding (DPO) impact and cash utilization.
• Making recommendations for combining working capital strategies, such as SCF, dynamic discounting and purchasing cards.

Your company’s executives could learn how to manage these thorny issues on their own — but their time is better spent concentrating on your core business. SwaS dynamic discounting providers allow you to improve your ROI without derailing the business-critical work of your internal teams.

Narrowing down a solution

One of the main advantages of a dynamic discounting program is that it can help you optimize your business’s financial resources. If you must invest a significant amount of internal resources to implement such a program, these costs may start to detract from the initial value the program was meant to provide. This is why SwaS solutions are a no-brainer — they enable you to reap the benefits of dynamic discounting with minimal internal effort. 

When evaluating dynamic discounting programs and SwaS providers, look for a balance between proven technology and end-to-end service and support. Most businesses benefit from a dynamic discounting solution that comes with a suite of professional services that take the guesswork out of running an effective and efficient program. 

At the end of the day, the best SwaS solution is one that provides a modern supply chain finance and supplier payment program, minimizes administrative and labor costs, generates a fair return on your excess cash and works closely with your suppliers to address their needs.

C2FO offers flexible dynamic discounting solutions that give you the option to fund early payments yourself or through a lending network. Learn more here.

This article was originally published in April 2016 and updated in November 2023.