As people struggled with financial uncertainty during the great recession, it sparked a wave of innovation to save money and generate income. TV shows like TLC’s Extreme Couponing focused on savvy shoppers capturing savings at the cash register. Others leveraged the power of networks to trade or rent personal items, such as Airbnb which enables home owners to become hoteliers.
During this time, businesses increasingly discovered that Dynamic Discounting captured significant cost savings within their supply chains. Fueled by greater adoption of business networks, large enterprises are collaborating with their suppliers to realize discounts on invoiced charges by negotiating faster payment cycles. Suppliers get quicker access to cash to meet payroll and other expenses and reinvest for growth. Plus, offering a discount on invoiced charges can offer suppliers a hassle-free alternative to securing short-term financing from banks. For buyers, the savings from negotiated discounts is often significantly more than what they gain from current interest rates.
Ariba’s Drew Hofler has been a long-time evangelist of dynamic discounting. According to Drew, those companies that have been most successful with dynamic discounting programs are utilizing business networks. The return-on-investment can be rapidly achieved and the savings are continuous as more suppliers participate and offer reoccurring discounts. In fact, one customer that Drew worked with gained enough savings within a matter of weeks to fund its three-year contract with Ariba.
Curious to learn more about how your company can capture fast cash through dynamic discounting?
Include sessions from the Business Networks campus on your SAPPHIRE NOW agenda and meet Drew. To learn more about Drew’s views on dynamic discounting and working capital management, read his postings at The Networked Economy blog.
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