A recent report from the Wall Street Journal indicates that many large companies are holding payments to suppliers for longer periods and that is projected to get even longer.  Why are they doing this?  Cash Flow!  They are taking extra time to pay and in the process freeing up billions of dollars in cash for other uses.  There are, of course, two sides to this issue.

As a customer, you might consider doing the same as the larger companies and holding cash longer before making payments.  There are risks involved such as credit reporting by your vendors but the larger companies are taking 60 to 100 days to pay!  The problem with this aggressive cash management approach lies on the other side of the transaction and raises many relevant business management questions.

As a vendor, you might not get paid for 60 to 100 days!  Do you have enough cash to cover your overhead and purchases for 100 days?  Are you large enough to bargain with your customers to get payment faster?  Do you have other alternatives at your financial institutions?  Should you consider offering some customers extended payment terms and negotiate more aggressively with others?

As your trusted business advisor, we can help you with the answers to these questions and more.  Call your Trusted Business Advisor at JamisonMoneyFarmer PC for assistance today!