Charity begins at home

 

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.