1. Business

What Is Dynamic Discounting & How Does It Work?

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Dynamic Discounting allows suppliers to get early payment for their invoices, and in doing so get a much better deal than the traditional options. The cost of getting working capital for your business is often prohibitive, but with Dynamic Discounting your company can lower that cost substantially by making your customers feel the benefit of doing business with you.

Dynamic discounting is offered on an invoice-by-invoice basis. The discount is in general indicated as a percentage of the face value of the invoice. 

The steps involved in the dynamic discounting process are:

After the order, the seller supplies the goods to the buyer→ Seller uploads the invoice on a dynamic discounting platform such as M1 Exchange→ Buyer approves the invoice→  Seller offers discounts and payment terms→ Supplier accepts one of the options→ Supplier receives payment on the chosen date.

Dynamic discounting is a covenant  for both parties involved. It improves the financial position of sellers and buyers and improves relationships throughout the supply chain. It also improves the relationship between the sellers and the buyers.

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