Everyman for himself

Faced with increased competition there is a growing trend from companies to press their suppliers into accepting lengthened 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 at a time when for the most part 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 on which the customer/supplier relationship is sustained.

One of the knock on effects of increased competition in the retail sector will be the erosion of profit margins and the further pressure on suppliers to absorb more of the pain.