Italian supermarket chain Pam Panorama has successfully tested a 'dynamic discounting platform' that facilitates advanced payment for invoices raised by suppliers offering a discount.
The aim of the mechanism is to optimise purchasing processes, while cash-strapped suppliers can benefit from payments made ahead of the stipulated time.
The platform has been developed by local start-up PlusAdvance.
The Process
The auction-based mechanism enables suppliers to share their invoices for the advance payment along with the discount rates in the system.
Every month, Pam Panorama invests a set amount in the mechanism, and indicates the discount it intends to avail.
The algorithm of PlusAdvance matches the data provided by both parties and selects the invoices for which payment can be facilitated.
Speaking to Il Sole 24 Ore, Pam Panorama’s financial director, Andrea Carlassare, explained that the retailer will invest a few tens of millions of euros in the mechanism every month, with the aim of getting a higher return than a simple short-term deposit in the bank.
"Looking forward, we would like to extend this possibility to as many suppliers as possible, trying to provide a service to SMEs, a way to give suppliers greater flexibility in managing working capital," he added.
'Win Win Mechanism'
The founder of PlusAdvance Massimiliano Gattari, has called it a "win-win mechanism" that provides operational flexibility to the supplier and is advantageous to the customer.
The potential network comprises more than 2,500 companies that sell over €1.5 billion of goods to Pam Panorama, every year, through 1.3 million invoices.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Branislav Pekic. Click subscribe to sign up to ESM: The European Supermarket Magazine.
