American Express, a globally integrated payments company, has announced the initial launch of Early Pay, a supply chain finance and dynamic discounting solution.
Image: The American Express building in New York City. Photo: Courtesy of Beyond My Ken/Wikipedia.org.
The new service from American Express is useful for US companies which buy goods and services from US-based suppliers, for increasing cash flow, to generate working capital and make their supplier payment process more efficient.
Suppliers, can benefit from this digital platform by having their eligible invoices paid earlier than their original payment due date at a competitively-priced early payment discount.
American Express stated that Early Pay does not charge implementation fees, setup fees, or ongoing maintenance charges for buyers who sign up. It also allows buyers to choose how they want to fund early payments to suppliers during implementation.
Early Pay will offer two funded payments including American Express funded and self-funded.
In the American Express funded payment, the financial services company can fund the discounted early payments to suppliers on the buyer’s behalf, allowing buyers to maintain their payment terms, increase cash flow, meet working capital needs and reduce the costs of goods and services sold. Buyers pay American Express back on the original payment date.
And, in self-funded payment, the buyers can choose to self-fund the discounted early payments to suppliers, allowing buyers the ability to capitalize on discounts to reduce the costs of goods and services sold.
American Express global commercial financing senior vice president and general manager Gina Taylor Cotter said: “Access to money and improving efficiency are crucial for the growth of both corporations and the companies they work with. The genesis of Early Pay actually began within the walls of American Express. We originally developed a service to use with our own suppliers in 2016, and its quick adoption and success led us to develop the Early Pay solution for external clients.
“Now companies can leverage their accounts payables to reduce costs of goods and services while offering automatic, flexible payment terms to their eligible suppliers.”
As per American Express, several suppliers are small and mid-sized firms and access to working capital is crucial for running their businesses smoothly. With Early Pay, suppliers can select offers from American Express on what they want to be paid in exchange for a discount.
This discount is claimed to reflect a lower cost than if they were to borrow from their bank and can improve their cash flow. The businesses will receive the payment via ACH or wire transfer to the supplier’s bank account by American Express or the buyer, in accordance with the buyer’s instructions.
This solution also removes the need for a lengthy onboarding, signing difficult paperwork, or paying an enrollment fee and the supplier is also not required to be an American Express Card-accepting merchant.