How Dynamic Discounting Can Make Your Small Business More Competitive

Want greater financial stability, cost savings and other benefits? If so, you should consider dynamic discounting.

Getting paid early can be a powerful method for growing your small business.

When your buyers submit their payments quickly, that increases your cash flow and working capital, unlocking a host of competitive advantages, like greater financial stability, increased production capacity, lower costs and more. It can be the launchpad for expanding market share, outperforming competitors and winning over major clients.

And the best way to encourage early payments? Dynamic discounting. 

With dynamic discounting, companies offer larger but still affordable discounts to customers that pay earlier. In a nutshell, the earlier the payment, the larger the discount. It’s a great way to access funding without taking on debt, paying sky-high fees or navigating a complicated application process. 

In fact, dynamic discounting is the model behind C2FO’s Early Pay solution. Every month, tens of thousands of businesses around the world use our platform to reinvest in their operations.

Here are just a few of the ways that dynamic discounting allows companies to ramp up their growth. 

Increased financial stability 

Being able to access capital quickly and affordably could be a huge advantage for your company. 

Whenever new opportunities arise, you can make the necessary investments quickly. If expenses rise unexpectedly, you won’t experience a catastrophic shortfall in cash. 

Having more capital also makes your company’s balance sheet stronger, which will make the business more attractive to investors and lenders when they’re needed. 

More investments in the company’s capacity

Like the saying goes, it takes money to make money. 

If you’re trying to grow your business, you’ll probably have to increase the size of your workforce. You might purchase equipment that increases your team’s efficiency and production capacity. Or maybe you want to develop an entirely new line of products, which means you’ll spend more money on R&D and prototyping. 

Dynamic discounting can give you the extra funding to make all these investments without requiring you to take on debt. 

Cost savings and greater margins

Another big benefit to having more working capital? It gives you more power to negotiate with your suppliers and seek discounts. 

In fact, many C2FO users use the money they receive from early payments to make bulk orders of inventory or materials at preferred prices. 

That lowers costs, and the savings can then be passed along to customers. Lower prices can help you outcompete your competitors and capture more market share. 

Bigger orders for bigger customers

Landing a major enterprise as a buyer can be a game changer for many small or midsize businesses, but the opportunity comes with a risk. 

Let’s say a national retailer wants to put your product in thousands of its stores. That would mean exponential growth for your company, but first, you’ll have to actually make and ship those products — and wait 30 days, 60 days, 90 days or even longer to get paid. It’s a huge commitment of money, and a lot of companies simply don’t have the resources. 

Dynamic discounting can help in two ways. First, it gives businesses more capital to pay for increased production, and it does that quickly, which is important. After all, your new customer probably wants your products soon, and you won’t have time to lobby your bank for more money. After all, securing a bank loan can be difficult and time-consuming for many small businesses. 

Second, dynamic discounting can also be helpful after you deliver the goods. Assuming your buyer offers a programme like C2FO’s Early Pay, you can speed up the payment of that invoice — and skip the part where you wait a month or two to get paid — so your business can meet all its financial obligations. 

Increased confidence and peace of mind

With dynamic discounting, businesses have a convenient, affordable source of working capital when they want it. That can be a huge source of motivation and encouragement. 

When companies tackle big new projects, they’ll have the ability to seize the opportunity and still have more than enough money for payroll and other obligations. If they suddenly have to replace a critical piece of equipment, they can increase cash flow to cover the extra cost. 

What would you do if you had that kind of confidence in your ability to access capital? What would you create? What new challenges would you embark on? What could you achieve? 

With C2FO, it doesn’t have to be a hypothetical. Learn more about our Early Pay solution and see just how powerful it can be here. Or check this list of buyers to see if one of your customers already offers C2FO to suppliers like you.