Early Payments: The Booster Shot To Strengthen Your Entire Supply Chain
Did you know that 64% of businesses mentioned “lagged internal processes” as the primary reason for supplier payment delays? We conducted an industry survey to identify the major pain points of companies and found that most of them still chase after their vendors for payments. Hence, the delay in supplier payments. This leads to higher frustration levels for many buyers/suppliers and majorly impacts the economic growth of the business.
Many businesses are having a reality check now and are searching for modern strategies to resolve such challenges by adopting early payment programs for timely payments.
Early Payments and Dynamic Discounting
Such slowdowns in the supply chain economy can be stressful and bring distrust among potential suppliers. It might look like a great idea to extend the days payable outstanding (DPO) to fulfil essential requirements when the business is in need, but in such cases, companies fail to benefit from early payment discounts. Moreover, they also miss out on opportunities to secure long-term suppliers because an intentionally delayed payment to the supplier can result in bad business.
With rising demands for finance among suppliers in the supply chain, the pressure also piles on financial providers to boost innovation and tone down the risks. Cutting-edge technology platforms such as KredX Dynamic Discounting support businesses in these cases to make timely payments. KredX Dynamic Discounting platform offers automated early payment solutions with advanced technology in the supply chain space, bringing transparency between businesses and suppliers.
Dynamic discounting is a flexible solution that helps buyers to decide when and how to pay their business suppliers for the services they avail of for a discount. Since large enterprises have several units, it gets taxing to approve a single invoice each time. Therefore, the business uploads all vendor invoices on the dashboard, where the vendor is provided with a payment date against each invoice and then bids a discount rate against the invoice value. The bidding technique not only helps enterprises get the option of price discovery per vendor but also gives them a scope to discount more invoices, keeping healthy competition among vendors intact.
While transparency becomes the most crucial element between the involved parties, an ethical and responsibly-implemented supply chain finance platform tops the priority list of most businesses.
Bringing Greater Reciprocity With Early Payments
Besides having the strategic advantages of early payment, it brings in fair business practices. It paves the way for an ethnic business ecosystem where suppliers promptly get paid for their services, and those who get their funds early reinvest in the market, helping the larger economy.
Running a business is all a balancing act between short-term acquisitions and keeping an eye on future opportunities. Companies today rely heavily on transparency in finance and higher reciprocity, to begin with, something as small as paying suppliers early. Going out of the conventional way is the need now, as this kind of reciprocity will bring a more significant change in finance.
