In a typical dynamic discounting setup, the buyer (usually a larger organization) and the supplier agree on a range of discount rates for different payment time frames. For example, a supplier might offer a 2% discount if paid within 10 days, a 1.5% discount if paid within 20 days, and so on. The earlier the payment, the higher the discount rate. This flexibility can be particularly advantageous for startups and small businesses that need to manage their cash flow efficiently.