What’s the difference between dynamic discounting and factoring?
Dynamic discounting is a mechanism by which suppliers can accept early payment from the buyer in the transaction in exchange for a discount. This is different to factoring, a process through which the supplier sells its invoices to a third-party factor who is then paid by the buyer as per the original payment terms. Although both are perfectly viable methods of accelerating receivables collection and boosting short-term working capital, dynamic discounting doesn’t involve a third-party. The early payment is made directly by the buyer.