Vendor Perspective: Quartix vs Today's Early Payment Solutions
When vendors are presented with early payment programs by their customers, their level of enthusiasm might not match your expectations. While some accept the offer readily, others decline without a second thought. Initially, this may seem surprising — after all, who wouldn't want to receive cash faster? However, the reason behind many vendors' refusal lies in the fact that current early payment alternatives are either restrictive or costly.
Quartix, on the other hand, is changing this reality by offering vendors a vendor-friendly early payment program. It addresses their main concerns, such as cost and flexibility, while putting them in control of their payment schedules and expenses. In this blog post, we will review the vendor early payment landscape and highlight key differences between Quartix and other solutions.
Cash Discounts or 2/10/net30 arrangements
Under a 2/10/Net30 arrangement, vendors can collect their cash within just 10 days — an incredibly quick turnaround. However, this arrangement comes with both a significant cost and a commitment for the vendor. In order to receive their cash 20 days earlier, vendors have to pay a 2% fee, amounting to a 36% annual percentage rate (APR). Moreover, this discount applies to all invoices issued by the vendor to that particular customer, making it an "all-or-nothing" proposition. Although variations of this arrangement exist (e.g., 2/10/Net45, 1/10/Net15), they do not offer any additional flexibility.
From a vendor's perspective, Dynamic Discounting provides a more flexible alternative to cash discounts. Vendors can choose which payments they wish to accelerate. However, they still face high rates since the funds used to expedite these payments come directly from the customer. Consequently, customers expect a significant return in exchange. Typically, Dynamic Discounting rates for vendors range from 25% to 30% APR.
P-Cards (purchasing cards) and V-Cards (virtual cards) are variations of charge cards, similar to consumer credit cards. Vendors who opt for these solutions must pay exorbitant rates to receive instant payment from the issuing bank. Similar to other alternatives, P-Cards are also an "all-or-nothing" proposition.
In stark contrast, Quartix provides vendors with the freedom to choose when they want to collect their payments, offering unparalleled flexibility and control. Vendors can either wait and collect their full payment at maturity or simply click a button to accelerate any approved payment instantly. Moreover, Quartix boasts rates that are approximately 2X-3X cheaper than those associated with 2/10/Net30 or P-Cards. Additionally, there are no fixed costs or subscription fees, further enhancing the vendor's financial benefits.
BTW - if you haven’t read our blog post that covers 5 different ways vendors use Quartix to their benefit, click here.
How do they compare?