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Plenty of A/P departments use some type of an online discount calculator to see it’s worth taking suppliers’ prompt-pay discounts. Well, here’s how your Finance department can get even more from that tool.
Get your Accounts Receivable to take some of the more popular prompt-pay discounts your firm is offering and run them through whatever calculator your A/P department uses. This is a quick and painless way to see if getting the cash more quickly is worth the price cut you’re firm is offering customers.
It’s best to focus on customers who always take your early-pay discount first, then eventually run all of your discounts through the calculator.
Whether you’re interested in using an online discount calculator in A/P, A/R or both, here is a great (and free) tool to check out — courtesy of the U.S. Treasury’s Financial Management Service.