dynamic discounting

Dynamic Discounting and Early-Payment Programs in Construction AP

Dynamic discounting flips the early-payment relationship: instead of a fixed 2/10 net 30 term, the buyer offers a subcontractor or supplier a sliding-scale discount that grows the earlier the payment lands. For a contractor sitting on cash, the annualized return can beat almost any other use of working capital. Here is how dynamic discounting works, the APR math behind it, and the construction-specific frictions — retainage, conditional payment clauses, lien-waiver exchange — that decide whether it is workable.