The high-volume world of wholesale and distribution is at somewhat of a crossroads right now. Earlier this month, the National Association of Wholesaler-Distributors (NAW) released results from a survey revealing the growing financial strain caused by tariffs, with a third of distributors reporting price hikes of 25% or more. Although these increases haven’t yet fully reached store shelves, the industry is bracing for a tougher reality in 2025, with 62% of distributors expecting their cost of goods sold to rise by 10% or more, while 67% are already feeling negative financial impacts.

As tariff chaos continues to drive up operational costs, distributors are searching for innovative ways to boost financial operations, with many prioritising the integration of AI and dynamic discounting, which enables buyers to offer early payment to suppliers in exchange for a discount. Unlike traditional early payment programs with fixed terms, dynamic discounting allows both parties to negotiate terms based on their cash flow needs and market conditions. This flexibility creates a mutually beneficial arrangement where buyers improve their margins and suppliers gain faster access to working capital.

Extended terms boost sales; dynamic discounting preserves liquidity

Wholesale and distribution businesses typically operate on thin margins while depending on strong buyer relationships, and to stay competitive, they’re often expected to offer generous payment terms, giving customers weeks or even months to pay. The ability to extend terms securely can also strengthen relationships with buyers, fostering a sense of loyalty and encouraging repeat business. Knowing that payments are secured irrespective of buyer behavior also allows companies to focus on strategic growth rather than worrying about day-to-day receivables. At 40Seas, we’re enabling companies to offer extended payment terms of up to 90 days to their customers, without impacting cash flow or absorbing credit risk, so they can focus on driving sales volumes rather than debt collection and underwriting payments. 

While extended terms support customer retention and sales growth, combining that with dynamic discounting helps suppliers manage liquidity by offering early payment in exchange for a discount. Together, they create a flexible financial ecosystem, buyers gain time to pay, and sellers maintain cash flow, enabling both parties to operate more strategically.

The role of AI in Dynamic Discounting

AI enhances dynamic discounting programs by analyzing transaction data, market trends, and supplier behavior to recommend optimal discounting strategies. These algorithms can prioritize payments based on a supplier’s financial health, past performance, and pricing trends, allowing distributors to unlock value that would otherwise remain hidden in static payment terms.

By using surplus cash to make early payments that yield the highest returns, distributors can improve liquidity and reduce their effective cost of goods sold, an especially valuable tactic as tariffs continue to drive up prices. Beyond cost savings, dynamic discounting also strengthens supplier relationships, offering accelerated payments to partners under financial pressure builds goodwill and helps maintain stability across the supply chain. Together, these benefits position distributors to better navigate rising costs and protect margins in today’s hyper-volatile market environment.