You can make money by paying invoices. How? By paying invoices well before the due date. Suppliers appreciate early payment, and they frequently translate such appreciation into a discount on the final price.
Dynamic Discounting gives CFOs a tool to improve operating margins. Discounting, in short, means that a supplier will give a three percent discount on the final price if the invoice is paid within a week, for example. That discount can be two percent if paid within two weeks and one percent if paid within three weeks. After all, it accelerates the supplier's accrual of working capital and this actually gives the supplier access to low-cost funding. "It is a cheaper alternative than the bank," said Gustaf Tanate, CEO of software company ISPnext. "It may be your own money, but you make it available sooner."
As a paying party, it helps the CFO better plan the cash flow. "Moreover, the return on available funds can be increased," Tanate said. "For cash-rich companies, it can be very attractive to create additional margin this way."