Lapasar
Finance & Payments

Dynamic Discounting

Dynamic discounting is an arrangement where a supplier offers a sliding early-payment discount that shrinks the closer payment is made to the due date.

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Unlike a fixed early-payment discount, dynamic discounting scales the reduction to how early the buyer pays — the sooner the payment, the larger the discount. The buyer chooses which invoices to pay early using its own cash, earning a return in the form of the discount, while the supplier gets faster access to funds.

It is funded by the buyer's surplus cash rather than a third-party financier, making it a flexible alternative or complement to supply chain finance. Both sides benefit when the buyer has spare liquidity: the buyer earns an attractive effective yield and the supplier improves cash flow.

Frequently asked questions

What is dynamic discounting?
Dynamic discounting is a sliding early-payment discount — the earlier the buyer pays an invoice, the bigger the discount — funded from the buyer's own cash.
How is dynamic discounting different from supply chain finance?
Dynamic discounting uses the buyer's own surplus cash to pay early, while supply chain finance uses a third-party financier and the buyer pays later on original terms.

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