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Resources | About C2FO | 7 February 2023

Using C2FO’s Early Payment Discount: The Difference Between an APR Offer and a Discount Offer

There are two different types of discount offers you can make to receive early payment using C2FO’s platform. How do they work and which should you use?


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There are two different types of discount offers you can make to receive early payment using C2FO’s platform. How do they work and which should you use?

If you’re reading this, it might be because your small to mid-sized business is looking for a solution to get paid by customers sooner and increase cash flow. You might also have been invited to register and use C2FO’s Early Payment programme by one or more of your customers and want to learn more. Either way, you’re most likely wondering: How do early payment discounts work with C2FO?

All early payment discounts follow the same basic principle. You give your customer a small invoice discount in exchange for early payment. With C2FO, you have two options when determining the discount — a fixed discount offer or an annualised percentage rate (APR) offer. Both options ensure you get paid early, but there are some key differences and advantages to each discount format.

This article covers the difference between the two offer types and which one is best for you — but first, here’s a quick rundown explaining how C2FO’s Early Payment platform works.

How does C2FO’s platform facilitate early payment discounts?

C2FO’s Early Payment platform is a tool that helps businesses access working capital by facilitating early payment discounts. Compared with traditional early payment discount arrangements, which are implemented manually, C2FO makes early payment processes easier, more efficient and beneficial for both buyers and suppliers.

C2FO partners with a large network of global companies, some of which may be your existing customers. In this case, you can simply access the platform by activating a free account. From there, you can view outstanding invoices that have been approved and uploaded by your customers, choose which invoices to accelerate and determine your discount rate for early payment (more on this later).

Your customers don’t just approve and upload invoices on the platform. They also set their own target rate of return for an early payment discount. C2FO’s proprietary algorithm considers your discount offer, as well as those from other suppliers, with your customer’s target return rate. In other words, the platform uses supply and demand data to approve early payment discounts that suit each party’s desired returns. This often results in a more affordable discount rate and creates a win-win for you and your customers. 

If the early payment offer is approved, your customer’s enterprise resource planning software automatically updates with the new invoice amount and payment date, and your customer pays you directly.

What are your discount offer options with C2FO?

When you determine your discount rate for early payment, there are two ways to express this rate: as a discount offer or an APR offer. What’s the difference?

A discount offer applies a flat discount rate to any outstanding invoices you choose to accelerate. When you use this option, the discount amount is the same for every invoice regardless of how early your customer pays. For example, if you choose a discount offer of 1%, this discount applies to each of your invoices, whether they were paid on day one or day 20.

An APR offer uses an annual percentage rate to calculate a unique discount for each invoice. APR is a measure of yearly interest or cost of funds — in this case, the discount cost. This rate adjusts depending on when the invoice is paid, a variable that C2FO refers to as days paid early (DPE). In simple terms, an APR offer means that the sooner your customer pays, the bigger the discount on the invoice.

You also have options when it comes to determining the rate value whether you choose to express the rate as a discount offer or an APR offer. When setting your discount rate, C2FO’s platform automatically suggests three different values:

  1. Express Accept: This is a more conservative discount rate with guaranteed, instant approval.

  2. Trending Rate: This is a more competitive discount rate that will most likely be approved, depending on the market.

  3. Name Your Rate: This allows you to manually enter your own rate while the platform suggests which rates are likely to be approved.

Which type of offer should you use? 

Both discount offers and APR offers will accelerate your invoices for early payment, increasing cash flow. However, there are a few things to consider before deciding which option is best for you.

Banks and other lenders often describe the cost of their products using APR because it provides a straightforward number for consumers to compare the yearly cost of funds. If you plan to use other funding sources, such as a bank loan, using APR offers on C2FO’s platform can make it easier to compare the cost of working capital access.

The takeaway

At C2FO, we’re dedicated to one all-consuming goal: helping your business grow. Understanding how C2FO’s discount offers work will help you make more informed early payment offers and maximise your access to working capital. 

To recap, discount offers apply a flat discount rate to all outstanding invoices regardless of when they are paid. With APR offers, the discount rate fluctuates depending on how early an invoice is paid.

Ready to get started? Click here to find out which of your customers are already using C2FO’s platform, or log in to request early payment on any outstanding invoices today.

This article originally published February 2021, and was updated February 2023.

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