How Treasury Can Harness the Power of Dynamic Discounting to Strengthen the Financial Supply Chain and Invest Excess Liquidity

July 10, 2014 Treasury Tim


As a Treasurer, finding the right balance between having appropriate levels of cash to meet operational and capital requirements, and getting the highest yield on short-term investments is our Holy Grail.

Yet historically, a number of us have subscribed to a “just in case” way of thinking which results in the natural desire to hold onto our cash. We have yet to move on from days of the past when interest rates were high  and we holding onto cash yielded competitive returns.

Nowadays, these strategies simply don’t work.  

But how can you become a Treasury Superhero with Dynamic Discounting?

Faced with these challenges, we need to think of new ways to generate returns from our cash.. For many businesses, this can be done by using tools like dynamic discounting to get more creative with how we manage and maximize, our returns.

When done appropriately, we can realize a number of business benefits, including strengthening our financial supply chain and uncovering an investment opportunity.


Top 3 Treasury Superpowers Gained from Dynamic Discounting

1. Increasing returns on cash.Holding onto your cash simply isn’t a viable returns strategy anymore as we currently live in a world of near-zero interest rates.

With dynamic discounting, at least $1 million per billion in spend can be saved, generating returns that are 50 times greater than Money Market accounts and Treasury Bonds. Now that is what being a true Treasury Superhero is all about.

2. Create more frequent opportunities for revenue. We get to set the rate we charge for early payments and when the supplier requests to be paid early, they see a discount that dynamically changes by how many days they are accelerating payment.

By paying approved invoices earlier than the due date, we turn invoices into revenue generators, sounds crazy, but trust me, it adds millions to the bottom line.

3. Keep bringing in the savings--it all adds up. Did I mention Dynamic Discounting adds millions to your bottom line?

Large organizations can have tens of thousands of suppliers, and this can mean millions in savings--yes multiple millions!  

By taking a new approach and embracing the benefits of dynamic discounting, we all have a better way to manage cash to make our businesses stronger and gain a competitive advantage.

Learn more on how dynamic discounting can help strengthen your financial supply chain.

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