Maximising Early Payment Discounts: Strategies for B2B Buyers

Early payment discounts offer a powerful way for businesses to reduce costs, improve cash flow, and strengthen supplier relationships—if they can overcome the operational hurdles.

Early payment discounts offer significant value for both buyers and suppliers by reducing procurement costs and improving supplier cash flow. These discounts, such as the common 2/10 net 30 model, allow buyers to save 2% if they pay within 10 days rather than the standard 30 days. Additionally, dynamic discounts offer even more flexibility, where the discount increases the earlier the payment is made. This mutually beneficial approach strengthens financial management on both sides, enabling more effective cash flow and operational planning.

The Untapped Potential of Early Payment Discounts

Unfortunately, many businesses leave substantial amounts of money on the table by not claiming available early payment discounts. It’s estimated that for every $1 billion spent on purchase orders, there are about $3 million in early payment discounts left unclaimed. Beyond the financial gains, early payments can also build stronger relationships with strategic suppliers, positioning businesses as preferred partners and opening doors to future collaboration and better terms.

While the benefits are clear, buyers often face significant operational challenges that make it difficult to capitalise on these opportunities. Ensuring timely payments requires aligning cash flow, fast-tracking invoice approvals, and efficiently onboarding suppliers with proper payment terms. To fully unlock the value of early payment discounts, businesses need to streamline these processes and eliminate operational inefficiencies.

Overcoming Operational Challenges with Credit Card Payments 

Credit cards offer an efficient solution to overcome many of the challenges associated with B2B payments, including early payments. By leveraging credit cards, businesses can streamline processes without immediate cash flow limitations. According to the State of B2B Payments report by Upflow, companies prioritising card payments see much faster payment turnarounds. 

Despite the advantages credit cards offer, card acceptance remains relatively low in B2B transactions. Many suppliers either don’t accept cards or are reluctant to manage the costs involved, limiting buyers' ability to streamline payments and take advantage of early payment discounts.

Billhop solves this by allowing buyers to pay suppliers using a commercial card, even when the supplier doesn't accept card payments. The supplier receives their payment via bank transfer, with no interaction with Billhop or need to adjust their payment processes. Meanwhile, buyers pay their card statement on the due date, allowing them to extend Days Payable Outstanding (DPO) and optimise working capital. 

Billhop offers several features designed to streamline the payment process and maximise working capital efficiency for businesses:

• ERP Integration: Billhop integrates seamlessly with existing Enterprise Resource Planning (ERP) or Treasury Management System (TMS) systems, allowing for real-time data sharing and streamlined payment processes without altering existing workflows​.
• No Supplier Onboarding for Tail Spend Management: Billhop allows businesses to pay tail-end suppliers quickly without the need for lengthy onboarding processes, also making it ideal for handling small, frequent purchases​.
• Approval Workflow: Billhop simplifies the invoice approval process to ensure timely payments and efficient coordination across teams.  
• International Payments: Billhop supports global supplier payments in 13 currencies. 
• Potential Balance Sheet Benefits: Billhop helps promote a healthier balance sheet by allowing card payments to be treated as accounts payable, rather than supplier financing, which generates interest-bearing debt.

Billhop’s features make it an ideal solution for businesses looking to streamline payments, optimise cash flow, and take advantage of early payment discounts without placing additional burdens on suppliers or internal teams. Get started today and see how Billhop can transform your payment process.