Suppliers often offer attractive early payment discounts to customers either because they have a lower credit rating and value early payment or because the supplier has reached internal credit limits on its customer and wish to reduce exposure while continuing to trade. These conditions create attractive opportunities for Demica’s Discount Capture solution.
Our flexible solution can be established to automatically calculate the applicable discount, select eligible payables, create a credit note for booking in a client’s ERP to adjust VAT and then make payment.
Demica’s clients immediately benefit from lower cost of goods sold, increased EBITDA and a higher equity valuation due to the improved profitability.
Our solution supports all forms of early payment Discount Capture including the German discount solution SKONTO and Spanish structures.
The impact on working capital can be mitigated, if required, by using third party funding lines that we arrange either with your relationship banks or with Demica's Investor Partners.
Demica has extensive experience in establishing Supply Chain Finance solutions in various formats. Discount Capture, powered by Demica, provides a valuable bank agnostic solution that works seamlessly with other forms of Supply Chain Finance including Dynamic Discounting. We have had particular success combining it with a Payment Extension structure: the profit captured from the discounts pay for a bank funded extension – in essence doubling DPO at zero cost to the client.
With early payments already agreed in many contracts or simply added by a one page contract variation, the decision to take the discount is taken by our client (as opposed to the supplier) resulting in there being limited need to onboard the supplier to the platform. This makes rolling out the programme extremely easy. One of Demica's clients automatically takes discounts on over €1bn of supplier spend within 12 months of launch.
"Demica’s solution enabled us to benefit from early payment discounts offered by our suppliers. The solution works seamlessly with limited supplier onboarding and full integration with our funding partners”
"We decided to engage Demica to enable us to reduce the amount of manual processing being conducted within our back-office teams. Demica’s solution enabled us to automate the processing of early payments while reducing our cost of sales”
Senior Director - Working Capital Solutions