For decades, accounts payable has largely been viewed as an operational function. Its role was straightforward: process invoices, manage payment terms and ensure suppliers were paid on time.
But in today’s environment, that view is increasingly outdated. As economic conditions fluctuate and companies look for ways to improve liquidity, finance leaders are beginning to see accounts payable not just as a back-office process, but as a lever for working capital strategy.
One of the most underutilized opportunities sits in plain sight: early payment discounts coupled with commercial credit cards.
The Traditional Tradeoff
Suppliers frequently offer incentives for early payment. A common example might be payment terms like “2/10 net 30,” meaning a buyer can reduce the invoice by 2% if the payment is made within 10 days instead of the standard 30-day term.
On the surface, the math looks simple. Pay early and save money.
But there is a catch. Paying early also means cash leaves the business sooner. For companies carefully managing liquidity, accelerating payments can shorten the time those funds are available for other uses.
This creates a classic tension between two goals finance teams care about: capturing savings while maintaining strong control over cash flow.
For many organizations, the result has historically been a compromise. They either take the discount and reduce available liquidity, or hold onto cash longer and miss the savings opportunity.
Research from Ardent Partners suggests that more than 60% of available early payment discounts go unclaimed, highlighting a significant opportunity for finance teams looking to improve margins through smarter payment strategies.
Rethinking the Equation
One emerging strategy we have introduced at Boost involves helping buyers use commercial card programs to capture early payment discounts while maintaining flexibility in cash flow. When a payment is made via a commercial card, the supplier receives funds quickly, but the buyer typically settles the card balance later as part of the card’s billing cycle.
Buyers that are willing to absorb the cost of the card transaction can view it as a tradeoff that still results in a net financial gain while preserving working capital flexibility. Suppliers get paid faster without taking on the cost of acceptance, while buyers capture the discount and extend their settlement timeline through the card issuer. It’s a rare example of a true win-win in payment strategy. This structure creates what we at Boost refer to as “card-based payables arbitrage.”
The supplier receives an accelerated payment. The buyer captures a discount, albeit less than the full discount being offered. And the buyer still retains access to capital for longer than they would have under a traditional early payment scenario.
A Simple Example
Consider a $100,000 invoice with terms of 2/10 net 30.
If the buyer pays within ten days, they receive a 2% discount, saving $2,000. In a traditional scenario, that payment leaves the buyer’s bank account immediately the AP department hitting the “ok to pay” button.
If the buyer instead uses a commercial card, the supplier still receives payment within the discount window. However, the buyer may not need to settle the card balance for several weeks depending on the card’s billing cycle and grace period.
Even after accounting for the transaction cost associated with card payment, the buyer can still retain a discount while maintaining additional liquidity for a period of time.
While the specifics may vary by industrial segment, credit worthiness and program structure, the principle illustrates how unlike traditional payment modalities, commercial cardholders can now concurrently enjoy the combined benefits of dynamic discounting and working capital extension.
Why This Matters Now
The broader implication is that payment methods are no longer just operational details. They can shape how companies manage liquidity, supplier relationships and financial flexibility.
We have been finding that sophisticated finance teams are willing to look more closely at how different payment rails impact working capital dynamics. Commercial cards, dynamic discounting programs and automated payment platforms are all part of that conversation.
What’s changing is the realization that the accounts payable function can influence more than just the efficiency of invoice processing. It can play a meaningful role in financial optimization.
The Role of Supplier Relationships
Of course, payment strategy cannot exist in a vacuum. Supplier relationships remain central to the equation.
Many suppliers value early payment because it improves their own cash flow and reduces uncertainty. Faster and digitized payments can also reduce reliance on manual processes and lower administrative costs tied to collections and reconciliation.
Research from PYMNTS shows that companies implementing accounts receivable automation can reduce days sales outstanding by as much as 32%, highlighting how payment processes directly impact working capital performance.
When payment methods align with both buyer and supplier priorities, early payment incentives can become a mutually beneficial “win-win” rather than a negotiation point.
From Cost Center to Strategic Lever
For years, conversations about working capital optimization were typically led by treasury teams. Today, those conversations increasingly include accounts payable leaders as well.
As payment technologies evolve and financial teams gain greater visibility into their payment data, AP departments are positioned to contribute more strategically to the organization’s financial health.
Early payment discounts are just one example. But they highlight a broader shift in thinking: payments are no longer simply about moving money. They are about how and when that money moves, and what that timing means for the business.
The opportunity, however, depends on execution. Buyers can only capture early payment discounts when they have a payment method that works across their supplier base, including suppliers that may not accept cards directly.
That is where Boost 100® can help bring this strategy to life. Boost 100 enables buyers to use their commercial cards across 100% of AP spend, giving them more flexibility to pay suppliers on the timeline required to capture early payment discounts while preserving the working capital benefits of card-based settlement.
For suppliers, the value is equally important: faster, more predictable payment without adding unnecessary friction to the acceptance process. When buyers can pay strategically and suppliers can receive funds in a way that works for their business, early payment discount arbitrage becomes more than a finance concept. It becomes an actionable working capital strategy.
For finance leaders looking to improve liquidity without sacrificing supplier relationships, that distinction is becoming more important than ever.
Sincerely,
