What Is Dynamic Discounting?
A sliding-scale discount offered to buyers who pay invoices earlier than the due date.
Detailed Explanation
The discount rate decreases as the payment date approaches the original due date. Sellers benefit from faster cash while buyers earn a return on early payment.
Example
A supplier offers a 2% discount for payment in ten days, 1% in twenty days, or full price at Net 30.
Why It Matters
Provides flexible incentives that accelerate cash flow beyond fixed early-payment terms.
Related Resources
Related Payment Terms Terms
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