For suppliers, leveraging supply chain financing and dynamic discounting results in:
- Increased cash flow (reduced DSO for suppliers)
- Enhance cash visibility/predictability
- Obtain additional sources of funding
- Reduce financing costs based on credit rating
- Off-balance sheet financing that does not impact supplier debt metrics
- Reduce accounts receivable inquiries and provide remittance information for free
For buyers, the benefits of supply chain financing and dynamic discounting are slightly different. Both programs increase cash visibility/predictability, reduce accounts payable inquiries, and improve critical supplier relationships. Supply chain financing can also increase free cash flow and reward banking relationships, while dynamic discounting can significantly improve the risk-free return on short-term cash investments, improve gross margins and reduce costs of operations (COGS).