Dynamic Discounting: Backdrop, Definitions, and Enablers [PRO]
With the launch of Trade Financing Matters yesterday, we thought it would be appropriate to double-click on one of the timeliest topics in receivables and payables finance: dynamic discounting. Note that by receivables financing we mean the selling or other leveraging of “receivables” as an asset on a supplying organization’s balance sheet to receive early payment. By payables financing, we mean the financing of early payment by a third-party (or the buying organizations’ balance sheet). In today’s analysis, with the input of David Gustin, Trade Financing Matters’ Managing Director, we’ll discuss how dynamic discounting can reduce risk and create greater liquidity in the supply chain. If you’re in procurement or accounts payable and are new to the topic, this brief will be a useful first step in understanding what dynamic discounting is, how it can help, and which technologies and technology vendors can enable it.