Do Suppliers Push Back on Dynamic Discounting and P-Card Programs?
Categories: Procurement Commentary, Trade Financing | Tags: Sourcing and Categories, Trade Financing Matters
This post originally appeared on Trade Financing Matters.
Do you see suppliers fighting back by raising prices when buyers use dynamic discounting or p-cards to settle more traditional supply chain spend? I hear that comment from Procurement officers sometimes, but there really is no data anywhere that I can find. Both dynamic discounting and p-card programs charge high annualized percentage rates. In the case of p-cards, the business model of interchange must support both the merchant and issuing card member bank. In dynamic discounting, it’s a risk free return for treasury. These high rates beg the question regarding when suppliers will just swallow the interchange in order to keep the customer and when they will push back (including refusing to accept a p-card in the first place).
I suspect that there is not as much pushback onto Procurement, and here is why:
- First, we are dealing with small, service based suppliers that typically have little leverage with large buyers. Large buyers ultimately make the rules.
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