There is a
growing pressure on Suppliers to accept extended payment terms if they wish to
retain the business.
Companies
who previously had accepted 30 day payment terms are now requesting periods of
up to 90 days.
Such terms
can only be served by larger organisations 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.
It has been
general commercial practise for companies to try to stretch the length of their
payment terms by all manner of means both fair and foul.
However 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.
No comments:
Post a Comment