Working in accounts payable, you may already be familiar with early pay discounts. These discounts are offered on a variety of different supplier invoices, used to incentivize organizations to pay invoices in a timely manner. Common offerings may include a 1% discount for payment within 10 days, and benefits can be seen by both the organization and the supplier.
At organizations with manual invoice processing or with inefficient AP solutions, these early pay discounts are often not taken advantage of due to time and resource limitations. In the grand scheme, 1% may not seem like a lot, but when processing thousands of invoices per month, the potential savings can really add up. With EZ Cloud, organizations are able to capitalize on these discount opportunities.
Why are early pay discounts beneficial?
Benefits are two-fold. For one, the supplier sees incentive to offer early pay discount opportunities, as it ensures that their cash flow is not interrupted by longer invoice payment cycles (i.e. Net 45 or Net 60). Conversely, this is also a huge opportunity for an organization, as they can pay for products and services at a discounted rate, which can really add up to major cost savings over time.
Below are just some of the benefits of early pay discounts:
- Discounted Products and Services
Organizations can gain discounts on invoices by paying them quicker than the stated due date. If your organization takes advantage of 1% discounts on each invoice while processing thousands of invoices per month, it’s a no brainer that taking advantage of these early pay discounts can lead to significant cost savings.
- Protecting the Supply Chain
moving and guaranteeing sufficient liquidity. Protecting the relationship between your organization and your supply chain is an integral component to maintaining a positive working relationship. It can also be essential to overall operations and continued, reliable business!
- Consistent Revenue Stream for the Supplier
Plenty of suppliers operate more comfortably with a steady revenue stream. Receiving invoice payments quicker can ease the burden of departments who have to keep up with monthly bills and expenses. With early pay discounts, suppliers can have better visibility into the payment process, as well as have the added benefit of knowing when their payments will be made. Greater supplier visibility eases employee burden for both suppliers and organizations. When payments arrive consistently and on time, maintaining a steady cash flow is possible, which is incredibly valuable for a supplier.
- Supplier Loyalty
No matter the discount’s size, organizations appreciate and remember when a company offers one. A customer will recognize that suppliers provided a deal, and they will be more likely to transact with you again. Win, win!Interested in discussing how EZ Cloud offerings can help your organization capitalize on early pay discounts? Contact Us today to discuss the benefits of how EZ Cloud!