Dynamic Payment Discount System for Buyer-Seller Transactions
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Solution Overview
Problem
Existing financial transaction systems lack efficiency in managing and facilitating payments between buyers and sellers, particularly in offering early payment discounts and handling varying payment terms, which can lead to inefficiencies and incompatibilities.
Innovation Solution
A computer-implemented business method and system that allows buyers to offer sellers early payment discounts based on an annual hurdle rate, with configurable payment days, and automatically processes payments according to selected terms, including standard, early payment, and adjustable terms, ensuring compatibility and efficiency in transaction processing.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If traditional paper payment systems or basic electronic payment systems are used, then payment transactions can be processed, but the systems lack efficiency in managing early payment discounts and handling varying payment terms
Solution Approach 1:
The system dynamically adjusts payment terms and discount rates based on real-time factors such as payment timing, buyer-seller relationships, and market conditions. Payment terms are not static but can be modified during the transaction process to optimize both efficiency and adaptability.
Solution Approach 2:
The system enables flexible modification of payment parameters including discount rates, payment due dates, and early payment terms. These parameters can be changed based on specific transaction requirements, allowing the system to handle diverse payment scenarios while maintaining efficient processing.
2Adaptability or versatility
If fixed payment terms are used between buyer and seller, then transaction processing is simplified, but the system cannot accommodate early payment discounts or varying payment scenarios
Solution Approach 1:
The payment system is designed to handle multiple payment term types (fixed terms, early payment discounts, variable terms) within a single unified platform. This multi-functional approach provides flexibility in payment terms without requiring separate systems for each payment scenario, thereby limiting the increase in system complexity.
Solution Approach 2:
The system introduces an intermediary payment management layer that mediates between buyers and sellers, automatically negotiating and managing varying payment terms. This intermediary layer handles the complexity of multiple payment scenarios, shielding users from system complexity while providing adaptability.
3Ease of operation
If manual management of payment discounts is implemented, then system implementation is simpler, but considerable effort is required to update and maintain payment terms
Solution Approach 1:
The system enables automatic self-service management of payment terms and discounts. The system can automatically update payment terms, calculate discounts, and adjust payment schedules based on pre-configured rules and real-time data, eliminating the need for manual updates and reducing maintenance time.
Solution Approach 2:
The system implements automated feedback mechanisms that continuously monitor payment transactions and automatically adjust payment terms based on performance data, market conditions, and agreed-upon criteria. This automated feedback loop reduces manual intervention and maintains ease of operation while minimizing time loss.
4Adaptability or versatility
If basic electronic payment processing is used, then transactions can be digitized, but compatibility issues arise with systems used by trading parties
Solution Approach 1:
The payment system incorporates universal interfaces and protocols that enable compatibility with multiple trading party systems including ERP systems, accounting software, and custom platforms. This multi-functional interface capability ensures broad compatibility without significantly impacting transaction processing speed through automated integration routines.
Data Source
AI summary
An embodiment of the invention is directed to a computer implemented business method in an electronic system in which payment information is exchanged between a buyer and a seller. Approval is received from the buyer of an electronic invoice received by the buyer. At a time when no agreed upon discount is available based on the invoice or pre-agreed terms between the buyer and the seller, a request is received from the buyer to offer the seller early payment in exchange for a discount of the amount owed. The discount is based on an annual hurdle rate provided to the system by the buyer. The offer is presented to the seller on the seller's user interface, and a clickable button is provided for the seller to indicate selection of such offer. In another embodiment of the invention, in an electronic system in which payment information is exchanged between buyers and at least a seller, an identification of a date upon which a seller would like to receive early payment is received through a computer input associated with the seller. Another embodiment of the invention is directed to a relationship between a buyer and a seller where there is a standard discount term, and there is also a discount term in a respective invoice. Another embodiment of the invention is directed to a method related to enrollment of a new seller in the system.