Issue 14 mapped the net economic contribution of every major B2B payment method. That analysis revealed which rails generate return and which consume it. This issue introduces the second variable that shapes Payment Yield: timing. The method determines what you pay through. The timing determines when. Both variables produce measurable economic impact, and both belong inside the Payment Portfolio Manager’s decision framework.
Payment timing carries the most available upside of any lever in enterprise finance. The gap between paying on a due date and paying strategically on a calculated date represents millions in working capital value across organizations of almost any scale. That value sits in three places: early payment discounts, float optimization, and DPO extension. Each one responds to specific timing decisions. Each one is measurable.
The 36% Return Hiding in Standard Payment Terms
The classic trade term 2/10 net 30 offers a 2% discount for paying within 10 days on an invoice due at 30 days. The buyer accelerates payment by 20 days to capture 2% of the invoice amount. The arithmetic is simple. The annualized economics are striking.
A 2% return earned over a 20-day period annualizes to approximately 36%. The formula is straightforward: (discount percentage / (1 minus discount percentage)) multiplied by (365 / (full payment days minus discount days)). Applied to 2/10 net 30: (0.02 / 0.98) × (365 / 20) = 37.2%. Money market accounts yield 4% to 5%. Treasury bills yield similar ranges. A 2/10 net 30 early payment discount yields seven to nine times that rate on the capital deployed.
The same math applies across the full spectrum of trade terms. A 1/10 net 30 discount annualizes to approximately 18.4%. A 2/10 net 60 discount annualizes to approximately 14.9%. A 3/10 net 45 discount annualizes to approximately 32.3%. Every combination of discount rate and acceleration period produces a specific annualized return that a practitioner can calculate, compare against the organization’s cost of capital, and act on with precision.
The full pool of available early payment discounts represents significant yield waiting to be captured. PwC’s Working Capital Study 25/26, analyzing over 17,000 companies worldwide, documents that net working capital days have returned to pre-pandemic levels, while DPO has been pushed out by more than 14% to compensate for worsening receivables and bloated inventory (PwC, 2025). Organizations that extend DPO as a blanket strategy leave early payment discount yield uncaptured. The working capital benefit of delayed payment is real. The yield available through selective discount capture, at 36% annualized, often exceeds it.
A Payment Portfolio Manager evaluates this trade-off at the supplier level. Some suppliers offer attractive discount terms. Others offer none. Some suppliers value early payment highly because it improves their own working capital position. Others are indifferent to timing. The portfolio approach treats each supplier’s timing economics as a distinct optimization opportunity, and the aggregate result flows directly into Payment Yield.
Float Optimization: How Small Timing Shifts Compound at Scale
Float is the value of holding cash between the moment an organization recognizes a payment obligation and the moment cash actually leaves the account. Every day of float has a calculable value determined by the payment amount and the organization’s cost of capital or short-term investment return.
A single day of float on a $100,000 payment at a 5% annual rate is worth $13.70. That figure is invisible at the individual transaction level. It becomes significant at portfolio scale. An organization processing $50 million in monthly payables that shifts its average payment timing by five days captures approximately $34,250 in monthly float value, or $411,000 annually. The cash stays in the organization’s operating account or short-term investment vehicle for five additional days across every payment.
Virtual cards amplify float economics through their billing cycle structure. As Issue 14 detailed, virtual card transactions settle on the card issuer’s billing cycle, typically 30 to 60 days after the transaction date. A payment made by virtual card on day one of a billing cycle can generate 45 to 60 days of float. The same payment made by ACH generates one to two days. The difference in float value on a $50,000 payment across a 50-day gap is approximately $342 at a 5% rate. Scale that across a $30 million annual virtual card program and the float contribution reaches six figures.
Float optimization is a timing discipline. The Payment Portfolio Manager who understands billing cycle mechanics can time virtual card payments to maximize the gap between transaction date and settlement date. Paying on day one of a billing cycle maximizes float. Paying on the final day compresses it. This is operational detail, and it is the kind of detail that separates a practitioner who understands method economics from one who also understands timing economics.
The Visa/PYMNTS Growth Corporates Working Capital Index found that four in five CFOs and treasurers unlocked approximately $19 million in average savings through working capital solutions (Visa/PYMNTS, 2025). Float optimization is one of the most accessible components of that savings. It requires understanding when cash moves and making deliberate decisions about that timing. A practitioner can begin capturing float value this quarter with the payment data and billing cycle information already available.
DPO Extension: The Lever Everyone Uses and The Discipline Can Sharpen
Days Payable Outstanding measures the average number of days an organization takes to pay its suppliers. DPO extension, the practice of lengthening payment terms to retain cash longer, has become the most widely used working capital lever in enterprise finance. The Hackett Group’s 2025 data shows that $1.7 trillion in excess working capital sits trapped across the top 1,000 U.S. public companies, and DPO management is one of the three primary mechanisms through which companies work to release it (Hackett Group, 2025).
The economics of DPO extension are direct. Every additional day of DPO on a $200 million annual payable base, assuming even payment distribution, retains approximately $548,000 in cash for one additional day. At a 5% annual rate, that daily retention is worth $75. Extend DPO by 15 days across the full payable base and the annualized float value reaches approximately $411,000.
Virtual cards serve as a natural DPO extension mechanism. A buyer pays a supplier on the original due date via virtual card, maintaining the supplier relationship and honoring the agreed terms. The actual cash outflow to the card issuer occurs 30 to 60 days later on the billing cycle. The supplier receives timely payment. The buyer gains 30 to 60 days of effective DPO extension on that transaction. Both parties benefit: the supplier gets paid on time, and the buyer retains cash through the billing cycle window.
This is the mechanism that connects Payment Yield to balance sheet impact. Every virtual card payment that extends effective DPO contributes float value to Capital Return while simultaneously improving the organization’s working capital position. Treasury teams recognize this contribution immediately because it maps directly to the metrics they already track.
Calibrating DPO Extension and Supplier Health
DPO extension and supplier health exist in a relationship that rewards careful calibration. Extending payment terms creates working capital value for the buyer. It also shapes the supplier’s working capital position. The discipline of Payment Economics addresses this relationship directly because long-term yield depends on a healthy supplier base.
Mastercard’s 2025 Commercial Card Acceptance Survey, conducted by Harris Poll across more than 1,000 senior financial decision-makers in 10 countries, found that 93% of B2B suppliers say digitizing payments is a top priority, and that the top concern for U.S. suppliers remains manual processing and reconciliation, cited by 42% of respondents (Mastercard, 2025). Suppliers care about payment predictability and reconciliation efficiency as much as they care about speed. An organization that extends DPO by 30 days while simultaneously improving payment predictability and remittance data quality can strengthen supplier relationships even as payment timing shifts. The combination of longer terms with better execution earns supplier confidence.
The Payment Economics approach to DPO extension follows the Law of Positive-Sum Design. The practitioner asks: how can we extend effective DPO in a way that also improves the supplier’s experience? Virtual cards answer that question directly by paying the supplier on time while deferring the buyer’s cash outflow. Dynamic discounting answers it by offering suppliers a choice: receive payment early at a discount, or receive full payment at the standard term. Both mechanisms create buyer value while respecting supplier economics.
PwC’s data on DPO extension trends reinforces why this calibration matters. DPO has been pushed out by more than 14% across the companies in their study, compensating for worsening receivables and inventory performance (PwC, 2025). Organizations using DPO extension as a calibrated instrument, applying it selectively through mechanisms that also benefit suppliers, build durable working capital improvement. The calibrated approach sustains itself because it preserves the supplier relationships that generate yield over multiple quarters.
Dynamic Discounting as a Timing Instrument
Issue 14 introduced dynamic discounting within the context of payment method economics. Here, it belongs in a second conversation: dynamic discounting as a timing instrument that creates value for both parties.
The classic early payment discount is binary. Pay within 10 days and receive 2%. Pay on day 11 and receive the standard term. Dynamic discounting introduces a sliding scale. A supplier can request early payment on any day before the due date, and the discount adjusts proportionally. Pay 25 days early at a 2% discount. Pay 15 days early at 1.2%. Pay 5 days early at 0.4%. The buyer deploys cash when the annualized return exceeds their hurdle rate. The supplier accesses liquidity when they need it.
The timing dimension gives dynamic discounting its strategic value. A Payment Portfolio Manager with visibility into the organization’s cash position can deploy dynamic discounting opportunistically. In weeks when cash balances are high and short-term investment returns are compressed, dynamic discounting offers superior returns on idle cash. In weeks when cash is committed to other uses, the program pauses. This flexibility makes dynamic discounting a complement to static payment terms and virtual card programs.
The supplier’s perspective adds a second layer of timing value. A supplier who needs cash on day 15 of a 45-day term can request early payment through the dynamic discounting platform and receive funds within 24 to 48 hours. The discount they offer is the cost of that accelerated access. For many suppliers, especially those in the small and mid-market segment, the certainty and speed of dynamic discounting improves their own cash flow forecasting. The buyer captures yield. The supplier captures certainty. Both benefit from the timing.
How Timing Decisions Interact With Capital Return and Supplier Acceptance
Capital Return and Supplier Acceptance are the two pillars of Payment Yield. Timing decisions affect both.
Capital Return increases when timing decisions capture more value per payment. A virtual card payment timed to maximize billing cycle float contributes more basis points than the same payment timed at the end of the cycle. An early payment discount captured at 36% annualized return contributes more than the float value of holding that same cash in a money market account. Every timing decision either adds to Capital Return or leaves available yield uncaptured.
Supplier Acceptance responds to timing decisions in subtler ways. A supplier who receives consistent, predictable, on-time payments develops confidence in the buyer’s payment program. That confidence makes the next conversation easier: the one where the practitioner asks about virtual card acceptance or dynamic discounting participation. Timing consistency builds the trust that expands Supplier Acceptance over time.
The compounding effect is real. Better timing discipline improves Capital Return in the current quarter. It also improves the conditions for Supplier Acceptance expansion in the following quarter. The practitioner who manages timing deliberately sees gains in both pillars, and the quarterly review from Issue 13 captures both contributions.
The Payment Portfolio Manager’s Timing Playbook
A timing playbook translates the economics of this issue into daily practice. It covers four operational areas.
First, early payment discount capture. The practitioner identifies every supplier offering discount terms, calculates the annualized return on each, and compares that return to the organization’s cost of capital. Every discount with an annualized return above the cost of capital qualifies for capture. The practitioner works with Treasury to ensure cash availability for the highest-return discounts and builds a priority list ranked by annualized return.
Second, virtual card timing optimization. The practitioner maps the organization’s virtual card billing cycles and identifies the optimal payment dates that maximize float duration. A payment scheduled on day one of a 30-day billing cycle generates 30 days of float. The same payment scheduled on day 28 generates two days. The practitioner establishes payment scheduling guidelines that align with billing cycle timing to capture maximum float value across the virtual card portfolio.
Third, DPO management by supplier segment. The practitioner applies DPO extension selectively based on supplier relationship value, supplier financial position, and available mechanisms. Strategic suppliers with collaborative relationships receive on-time or early payment. Long-tail suppliers with standard commercial relationships receive payment at the full term or through virtual card mechanisms that extend effective DPO while maintaining on-time supplier payment. Issue 16 will develop the supplier segmentation framework that informs these decisions.
Fourth, dynamic discounting deployment. The practitioner establishes a hurdle rate (the minimum annualized return required to deploy cash into early payment) and monitors the dynamic discounting platform for supplier requests that clear that threshold. Cash deployment decisions happen weekly, aligned with Treasury’s cash position reporting. The practitioner tracks the total annualized return on dynamic discounting capital deployed and reports it as a component of Capital Return in the quarterly review.
The playbook connects every timing decision to Payment Yield. The practitioner who follows it captures value on three fronts simultaneously: discount yield on qualified suppliers, float value on optimally timed virtual card payments, and working capital benefit from calibrated DPO management. The combined contribution flows into the Payment Yield calculation from Issue 10 and the business case framework from Issue 13.
Questions Worth Asking
What is the annualized return on the early payment discounts currently available from your supplier base, and how does that compare to your organization’s return on short-term cash holdings?
How many suppliers in your portfolio offer discount terms, and what percentage of those discounts does your organization currently capture?
When your organization schedules virtual card payments, does the timing align with billing cycle mechanics to maximize float?
How does your organization calibrate the trade-off between DPO extension value and supplier relationship health for each supplier segment?
If you calculated the total annual value of timing optimization across discounts, float, and DPO management, what would that figure contribute to your organization’s overall Payment Yield?
Next Issue
Issue 16 examines Supplier Segmentation and Portfolio Construction: treating your supplier base as a portfolio and building it with the same discipline that investment managers apply to asset allocation. The issue operationalizes the portfolio view from Book One, showing practitioners how to segment suppliers by yield potential, strategic value, and conversion likelihood, then allocate attention and resources across segments for maximum Payment Yield impact.
Payment Economics in Practice
AP Copilot: The AP platform built for AP teams. AP Copilot turns accounts payable into a profit center through workflow tools designed for the people actually processing payments. The platform achieves 50% virtual card acceptance, 10x the industry average, by making supplier conversion and daily payment work visible, collaborative, and rewarding. 1% of all revenue goes to planting trees. Learn more: https://apcopilot.com
About The Payment Economics Journal
The Payment Economics Journal examines how organizations measure and capture economic return from payment operations. Published weekly. Created by Daniel Jasinski.
Payment Economics Framework
For the complete Payment Economics framework, including Payment Yield, Capital Return, Supplier Acceptance, and the Payment Portfolio Manager role, see the Payment Economics Journal.
Suggested Citation
Jasinski, D. (2026). The Economics of Payment Timing: Payment Timing as a Strategic Lever for Businesses. The Payment Economics Journal, Issue 15. Clear Paths Growth.
Authorship & Intellectual Property
© 2026 Daniel Jasinski. All rights reserved. The Payment Economics Journal, Payment Yield, Capital Return, Supplier Acceptance, Payment Portfolio Manager, Payment Economics Practitioner, Payment Efficiency Index (PEI), and Payment Cost Ratio (PCR) are original frameworks and terms introduced by Daniel Jasinski. No part of this publication may be reproduced, distributed, or transmitted in any form without prior written permission, except for brief quotations in reviews and academic citations with proper attribution.
References
Hackett Group. (2025). 2025 U.S. Working Capital Survey. The Hackett Group. https://www.thehackettgroup.com/insights/2025-working-capital-survey-2508/
Mastercard. (2025). Commercial Card Acceptance Survey 2025. Mastercard / Harris Poll. https://www.mastercard.com/global/en/news-and-trends/stories/2025/commercial-card-acceptance.html
PwC. (2025). Working Capital Study 25/26. PricewaterhouseCoopers. https://www.pwc.co.uk/services/value-creation/insights/working-capital-study.html
Visa/PYMNTS. (2025). Growth Corporates Working Capital Index 2025-2026. Visa / PYMNTS Intelligence. https://corporate.visa.com/en/solutions/commercial-solutions/knowledge-hub/working-capital-index.html