GLOSSARY
Dynamic Discounting
A buyer-funded version of supply-chain finance: the supplier offers an early-payment discount and the buyer chooses, per invoice, whether to take it. No third-party funder is involved.
In dynamic discounting, the buyer uses its own cash to pay the supplier early in exchange for a discount that scales with how early. There's no third-party funder; the buyer is, in effect, earning a yield by deploying short-term cash against approved payables.
Why it matters
For cash-rich buyers, dynamic discounting is a higher-yielding home for short-term cash than treasury bills, with the supplier covering the spread. For suppliers, it's the simplest of all SCF flavours — no onboarding to a funding partner, no consent-letter mechanics — but it depends entirely on whether the buyer happens to be in a discount-capacity mood that month.
Related terms
- Supply Chain Finance
- Reverse Factoring
- Approved Payables Finance