AeroPay Express Shares The Working-Capital Problem Hiding Inside a 60-Day Invoice

A supplier that ships $100,000 of product today and collects the invoice 60 days later has made a sale. It has also financed part of its customer’s business for two months.

That second transaction is easy to overlook.

Net-30, net-45, and net-60 terms are standard features of B2B commerce. For the buyer, they preserve cash and extend days payable outstanding. For the supplier, the same terms push cash further into the conversion cycle. Inventory has already left the building. Freight, payroll, and the next purchase order still have to be funded.

The result is trade credit, whether either company calls it financing or not.

There is already a large industry devoted to shortening that gap. Factoring converts receivables into immediate cash. Asset-based lenders advance against borrowing bases. Dynamic discounting allows buyers to use their own cash to settle invoices early for a discount. Large corporations also operate supplier-finance programs built around approved payables.

Most of those structures start with either the supplier entering a financing relationship or the buyer establishing a formal program.

AeroPay Express is built around a different starting point: the vendor can initiate an early-payment request against an invoice owed by a creditworthy buyer.

The mechanics are relatively straightforward.

A vendor delivers the goods or services and uploads the invoice. AeroPay sends it to the buyer, which verifies the amount, due date, and ownership. If the buyer approves and passes AeroPay’s credit process, AeroPay pays the vendor up to 97% of the invoice rather than making the vendor wait until maturity.

AeroPay then reinvoices the buyer.

The distinction matters because the company is not primarily trying to provide financing to a weak buyer. Its materials say the opposite. AeroPay’s ideal buyer is established, well-capitalized, and has a strong payment history. Companies that need financing simply to purchase goods are not its preferred credit profile.

The buyer’s strength is what makes early payment to the vendor possible.

That also changes the importance of the seller’s balance sheet. AeroPay evaluates whether the vendor has actually completed and delivered the goods or services, but company materials say the vendor’s credit quality is not the central underwriting issue because payment is based primarily on the buyer’s repayment ability.

AeroPay also does not require the vendor to give it an Article 9 or UCC lien on the company’s assets.

For a supplier that already has a bank line, factoring facility or another lender with a security interest in receivables, that can be a meaningful difference. Rather than asking the company to restructure its entire borrowing relationship, AeroPay is built around the individual commercial transaction.

The company describes itself as an Early Pay facilitator, not as a factor, purchase-order lender or supply-chain finance company.

Its business model nevertheless sits beside all three because it addresses the same underlying question: how does a supplier turn a completed sale into usable cash before the original customer decides to pay?

The vendor usually pays for that acceleration.

AeroPay’s materials describe a typical discount of 2% to 3% for a 30-day term. That resembles the merchant-fee logic the company frequently uses to explain its model: the seller gives up a percentage of the transaction in exchange for converting a future payment into cash today.

But AeroPay also gives the buyer a financial reason to participate.

When a buyer signs up directly for the program, company materials say it can receive up to half of AeroPay’s discount if it settles within two weeks of the vendor being funded. If it extends payment for up to 33 days, it can receive a rebate equal to 25% of the fee. A buyer seeking still more time can forgo the rebate in exchange for longer terms.

That creates an unusual three-way working-capital trade.

The vendor is deciding what early liquidity is worth. AeroPay is pricing the buyer’s credit risk. The buyer is deciding whether it values a rebate or additional time to pay.

Those decisions will not produce the same answer on every invoice.

A supplier with unused low-cost bank capacity may have no reason to give up 2% or 3%. Another supplier may be near its borrowing limit, need to replenish inventory immediately, or have another order waiting for working capital.

For that company, comparing the discount only with the cost of waiting can miss the point. The real alternative might be delaying another order, stretching its own vendors, or increasing borrowing.

Payment terms are therefore doing more than setting a due date. They determine which business carries the financing burden between delivery and settlement.

AeroPay’s vendor-led model is essentially a bet that suppliers should have more control over that decision.

Buyers are unlikely to stop asking for terms. Vendors are unlikely to stop using terms to win business. The more interesting question is whether the company waiting to get paid should also have to be the company financing the wait.