How Does Dynamic Discounting Platform Work?

source: google

As the word Dynamic suggests, dynamic discounting is a spontaneous process through which the buyers have got the power to pay their suppliers at a discounted rate which is not fixed. The rate at which it changes is dependent upon the time of payment. If the payment is made early the discount offered is also heavy. It is a simple online platform upon which the suppliers can submit their invoices for early payment and the buyers can view and approve the invoices eligible for early payment. It is a win-win situation for both the parties as the buyer's balance sheet is not affected and the sellers need for working capital is fulfilled on time. This ultimately helps in maintaining a smooth flow of business, as the seller gets the cash flow required to fulfil the next order.

Priority Vendor

Let's have a look at the whole process step by step.

- The vendor or the supplier sends the original invoice to the buyers.

- The buyer reviews the invoices and after it has cleared the eligibility criteria and all the credit/debit memos eligible for discount negotiation are cleared, it is uploaded electronically on the platform.

- After the invoice is uploaded the supplier can view the all the uploaded invoices on that platform. They can wait until the original maturity date of the invoice to get the payments or they can apply for an early payment request and get their payment released at an earlier date by giving a discount on the actual amount of the invoice.

Priority Vendor

PriorityVendor has been working upon bringing together various businesses and suppliers to connect them to this dynamic discounting platform. It is a simple process of smoothening the business flow. It has had a successful run in the retail, food and beverages, and electronic industry. This Vendor Finance facility prevents the suppliers or the vendors from approaching banks for loans at high interest rates in order to maintain their working capital. This kind of supplier finance also helps the buyer or the businesses as the money they are giving to the supplier was originally earning the interest from the banks which is quite low if we compare it to the discount that they are giving on the invoices to the vendors.

Source: Vendor Avii