Businesses in the UK are increasingly turning to dynamic discounting to solve the growing problem of late payments, a new report says.
Procurement software provider Wax Digital asked 100 UK procurement professionals about dynamic discounting, and 27 per cent said they're already using it. Another 30 per cent said they're planning on implementing the approach in the next 12 months, and 20 per cent said it's a long-term objective.
In total, that’s 77 per cent of businesses (more than three quarters).
Dynamic Discounting is a practice under which buyers get a lower price, or a discount, if they choose to pay for goods or services faster. The faster they pay, the bigger the discount.
The practice is a solution to an ever-growing problem which has left many businesses in the UK struggling to survive.
According to Wax Digital’s report, UK’s small and medium-sized businesses are owed, in average, £12,000 each in late payments, which amounts to £55bn countrywide.
Almost a quarter (23 per cent) have considered insolvency, while more than two thirds (68 per cent) wait 60 days, or more, for payment.
“Serious late payment and cash flow issues are more likely to destroy a business of any size over and above anything else,” said Daniel Ball, business development director, Wax Digital.
“It appears that the business community is now taking the bull by the horns to solve this growing problem while suppliers can use a different type of bargaining power. Although businesses may get paid slightly less for their products and services they gain the benefit of having the cash in the bank much more quickly.”
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