Dynamic Discounting describes an arrangement between a buyer and supplier whereby payment for goods or services is made early in return for a reduced price or discount. The arrangement includes the ability to vary the discount according to the date of early payment. The earier the payment, the greater the discount.
Until the maturity of Purchase to Pay and the associated procurement software, discounting for early payment was very difficult to achieve. Inefficient paper based and manual processes would make even payment to term challenging and dynamic discounting, capturing changing price reductions and varying payment terms was impossible.
Read more on Dynamic Discounting.