An early payment program is a strategy where businesses offer early payments to suppliers in exchange for discounts.

This is a mutually beneficial arrangement that results in lower costs for the buyer and more working capital for a supplier when they need it.

However, all early payment programs are not created equally. If they rely on manual processes rather than automation, they are set up to fail. apexanalytix can help you begin an early payment program that helps you create and distribute early payment offers to suppliers, while leveraging our technology and data to serve the right offer to the right supplier segment at the right time.

Read how one apexanalytix client used our Dynamic Discounting module to make their AP department a profit center.

In addition to embracing automation, there are six best practices that can help you get the most out of your early payment program:

1. Remember that one size does not fit all.

Different supplier segments have varying needs and preferences. Tailoring rates and messaging to cater to these distinct segments ensures higher offer acceptance rates.

2. Don’t limit by payment method.

Some early payment programs limit discount offers to suppliers who use ACH. However, we’ve found that suppliers who receive checks have an equal or higher adoption rate when compared to ACH recipients. Including all suppliers, no matter their preferred method of accepting payment, will increase the amount of discounts captured.

3. Improve invoice cycle times.

The earlier you can enter and approve an invoice, the greater the likelihood a supplier will accept an early payment discount. The earlier you pay, the bigger your savings.

4. Don’t sell yourself short.

Some companies pay invoices more than seven days early at no discount. The average company loses 70% of their discount capture potential because of these “free” early payments.

5. Combine discount offers with extended payment terms.

Extending payment terms both creased more demand and extends the discount timeframe—which increases the discount rate.

6. Make it easy for suppliers to participate.

Making your offer clear, tailored, and timely will increase adoption, and making it as easy as possible for a supplier to accept is a must. Something as simple as including an “accept offer” button in an email can lead to a 40% increase in acceptance.

Early payment programs can be a win-win for the buyer and the supplier. To maximize the value of the program and the amount of suppliers participating in it, companies should employ these best practices. To further ensure your success, consider partnering with apexanalytix to build a program with our Dynamic Discounting Module. Get in touch to learn more.