A multinational company is in the market to purchase widgets.

Definition: Dynamic discounting is a financial strategy where the buyer can take a discount for early payment, often negotiated on a sliding scale.

Example Context: The supplier offers a 2% discount if payment is made within 35 days instead of the standard 80 days.

Benefit: This incentivizes the buyer to pay earlier, improving the supplier's cash flow while offering the buyer a cost saving.

References

Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2016). Purchasing and Supply Chain Management. Cengage Learning.

van Weele, A. J. (2018). Purchasing and Supply Chain Management: Analysis, Strategy, Planning and Practice. Cengage Learning.