Launching a dynamic discounting programme is a powerful way to turn your company’s balance sheet into a high-yield, low-risk investment. But a successful launch requires a clear strategy and a structured approach. This practical guide breaks down the process into five key steps, providing a clear roadmap for finance and procurement leaders.
Step 1: Build a Cross-Functional Business Case
A successful programme starts with internal alignment. This is not just a treasury initiative; it requires buy-in from multiple departments.
- Finance & Treasury: Define the financial goals. What is your target APR? How much cash will be allocated to the programme?
- Procurement: Align on the supplier relationship goals. How will this strengthen your supply chain?
- IT: Assess the technical requirements for integrating a platform with your existing ERP system.
Step 2: Select the Right Technology Platform
The success of a modern dynamic discounting programme hinges on your technology. Spreadsheets and manual emails won’t scale. Look for a platform with:
- Seamless ERP Integration: The platform must connect to your ERP via APIs to automate the flow of approved invoice data.
- An Intuitive Supplier Portal: The key to adoption is making it incredibly easy for your suppliers to see their approved invoices and accept early payment offers.
- Flexible Discounting Logic: The platform should support a “sliding scale” model, where the discount changes based on how early the supplier chooses to be paid.
Learn more in our guide to Supply Chain Finance Platforms.
Step 3: Segment and Prioritise Your Suppliers
You don’t need to onboard all of your suppliers at once. A phased rollout is the most effective approach. Use data to segment and prioritise your suppliers based on:
- Spend Volume: Start with your largest suppliers to maximise the initial financial impact.
- Payment Terms: Target suppliers with longer payment terms (e.g., 60-120 days), as they have the most to gain from early payment.
- Strategic Importance: Prioritise critical suppliers whose financial health is essential for your own operational resilience.
Step 4: Run a Pilot Programme
Before a full-scale launch, run a controlled pilot with a select group of 10-20 of your prioritised suppliers. A pilot programme allows you to:
- Test and refine your workflow and payment processes.
- Gather direct feedback from your suppliers.
- Generate early success stories and internal champions to build momentum for the wider launch.
Step 5: Launch, Measure, and Scale
With a successful pilot complete, you are ready for a full launch.
- Launch: Communicate the benefits of the programme clearly to your entire supplier base.
- Measure: Track your Key Performance Indicators (KPIs). While metrics like supplier adoption rate are crucial, the most important financial metrics are the total discounts captured and your effective Annual Percentage Rate (APR). Check how dynamic discounting calculator can help you estimate this potential annual ROI.
- Scale: Use your digital platform to easily expand the programme to new business units, regions, and the “long tail” of your smaller suppliers to maximise your ROI.
Ready to start your journey? Contact our team for a consultation.