More than any other financial issue, supplier organizations are concerned about receiving payment from customers and receiving that payment quickly. Often, suppliers may consider early payment opportunities to improve cash flow and working capital, and it can certainly play a part in expediting cash through the Order-to-Cash process.
One question for financial decision makers within these supplier organizations is when to take early payment. The best time to leverage early invoice payment will vary depending on the organization and the situation. There may be a need for improved working capital during a given quarter and increased cash flow to cover payroll in another.
Additionally, suppliers should consider the cost of money as well as the financial health of the customer they are receiving payment from. Regardless of the reason, early payment can help suppliers meet several critical organizational objectives, including the need for working capital, improving cash flow and financial health of the customer.
Ernie Martin Receivable Savvy
ReceivableSavvy's Ernie Martin breaks down the details HERE.