Can earning prompt-payment discounts really save money?

Healthcare financial managers should determine whether to take advantage of the discounts vendors offer for prompt payment of invoices. Prompt-payment discounts offered by vendors can result in substantial savings, but this benefit may be offset by the costs of acquiring the funds necessary for faster payment. The best results are achieved when the cost of funds is less than the discount savings that can be achieved, vendor discounts are available for a high percentage of the provider's purchase base, the provider is able to negotiate with vendors to increase discount levels, and the provider has an efficient system for processing invoices.