The new owners of Peacocks the clothing retailers have come
up with a new wheeze – switching all their Suppliers to 90 day payment terms.
Such terms can only be served by larger organisation with
adequate cash reserves. For the small to medium supplier it further ratchets up
the pressure as Banks are unwilling to increase their credit lines.
For some time companies have sought to stretch the length of
their payment terms by all manner of means both fair and foul.
As profit margins are further squeezed by increased
operating costs the importance of maintaining cash flow is vital.
Business is hard-won in the current climate, but above all
there has to be a commercial raison d’être for any transaction.
Mutual reciprocity has to be the basis for the
Customer/Supplier relationship for it to remain worthwhile.
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