Your Customer's Early-Pay Offer Is a Loan You Underwrite

A founder I work with runs a $9M services business. One customer is 40% of his revenue, a name everyone would recognize. In May that customer's procurement team emailed him an invitation: enroll in their new supplier early-payment program and get paid in 10 days instead of 60, for a fee of 1.8% per invoice. He was staring down a tight quarter. He said yes in about five minutes and felt like he'd been done a favor. What he actually did was take out a loan at roughly 13% APR and agree to pay it on every invoice from then on.

Payments became infrastructure, and your receivables are the product

This is showing up everywhere right now, and it isn't an accident. The reporting this month on how CFOs are running working capital all points the same direction. Buyers are turning payment timing into a yield strategy: dynamic discounting, virtual cards, supply chain finance. The mechanics differ. The move is identical. The buyer holds onto its own cash longer while a bank or platform sits in the middle and pays the supplier early for a cut.

Your customer's CFO is generating a return. That 1.8% is their yield. It comes out of your margin.

These programs used to live between giant companies and their giant suppliers. They've moved down-market. Now a $9M vendor gets the same invitation, dressed up as a convenience, with a one-click enrollment that quietly applies to every future invoice.

Price it like the loan it is

Accelerating a receivable is borrowing against it. The fee is interest. So run the number every lender runs.

A 1.8% fee to get paid 50 days early annualizes to about 13%. Now compare that to what you already have. Got a line of credit at 9%? The early-pay program costs you four points more than your own bank. Sitting on cash earning 4%? You're paying 13% to pull forward money you didn't need this week.

If you wouldn't take the loan at that rate from a bank, don't take it from your customer's bank. The relationship doesn't change the math. It just makes the math harder to look at.

There's exactly one case where it pencils. You have no line, no cushion, and a real gap inside that 50-day window. Even then, you take it knowing it's the most expensive money on your balance sheet, not because the email called it a discount.

Decide it per invoice, not once

The trap isn't the first yes. It's the standing enrollment. You opt in during a tight month and the fee keeps coming out every quarter after, including the ones where you're flush and financing nothing.

Treat each offer as a treasury decision. Fee divided by days accelerated over 365 gives you the rate. Take the cash only when your forecast shows a gap before the invoice would have paid anyway. If the program won't let you choose invoice by invoice, that tells you who the program was built for.

Your customer didn't offer you faster cash. They offered to lend you your own money and charge you for the privilege.