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
at a time when 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.
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