Supply chain finance can be an effective way for large organisations to optimise their cash. In percentage terms, the numbers can seem vanishingly small. Remove the cut that the banks take and it can seem like there’s nothing left, and suppliers are punished with extended payment terms. Hardly a surprise that SCF often has poor adoption rates!
But suppose you cut out the middleman - after all, it’s not their money - and you work directly with your suppliers on a shared reward discounting arrangement. How much better would that be for your organisation and your suppliers if the skimming is eliminated? And how much better would adoption be when suppliers benefit too?
The idea behind dynamic discounting is simple. Your suppliers need cash now – so you pay invoices early and they give you a discount. It’s that easy.
So why do AP automation platforms make it difficult? When you know how they work, you understand. They need to do something to justify their cut. "Gainshare" sounds respectable but we should really call it what it is – skimming.
Dynamic discounting is an arrangement between buyers and suppliers and in an age when everyone is using sophisticated technology every day - from cloud hosted ERPs to banking apps - there's no justification for a bank or an AP automation platform to take gainshare from you or your suppliers. It’s not their money! They don’t do anything for it, you shouldn’t be giving it to them.
The details of gainshare are kept vague on purpose. The less you see, the more they can take. And the more money they skim, the more the entire equation shifts. The result is your suppliers and your supply chain suffer - and that’s why they don’t play.
So how much is this skimming costing your organisation and your supply chain?
Our calculator shows the true impact. You'll see the actual discount earned, the real return to you as the buyer, the cost pushed onto the supplier, and the amount these platforms pocket for themselves.
See How Much You're Losing
Purchasing Insight by Pete Loughlin
Pete Loughlin is a seasoned Source-to-Pay professional with over 30 years of specialist experience in procurement, accounts payable, and supply chain finance. Recognised internationally as a leading authority in the field, Pete has helped organizations optimise their end-to-end procurement and financial processes through strategic advisory, technology enablement, and deep industry insights.
With unparalleled knowledge of Source-to-Pay solutions, Pete has guided global enterprises in transforming their purchasing and payment operations, improving efficiency, compliance, and supplier collaboration. His expertise spans across technology strategy, solution design, process automation, and financial supply chain optimization.
A well-known expert and thought leader, Pete has delivered keynote presentations at major conferences across Europe and the United States, sharing his vision on the future of procurement and financial innovation. His insights continue to shape how organizations think about digital transformation in the Source-to-Pay ecosystem.
Glossary
Annual Spend:
The total amount spent by a company or a department in a given time period.
Addressable Spend:
The portion of a company's total spend that the procurement department actively manages. This excludes categories such as taxes, payroll, utilities, and other expenses.
Desired APR Return:
The annualized rate of return the buyer wants to earn on early payments made to suppliers, expressed as a percentage.
Gainshare:
A pricing model in which a third-party technology provider pockets a cut from early payments – this is the percentage they take or skim off the top. It artificially inflates the offer rate on early payments, costing suppliers.
Required Offer Rate:
The annualized rate suppliers must be offered so the buyer achieves their APR return.
Supplier Adoption:
The percentage of eligible suppliers expected to participate in early payment programs at a given offer rate.