One year ago I posted the below blog on Supply Excellence - http://www.supplyexcellence.com

I'm re-posting to make a point that the economy has not changed dramatically for the supplychain in North America.  If anything it has become worse because money isn't flowing.  There is more cash tied up in large corporations today than there was one year ago.  Competition is fierce and everyone is working to survive.  This blog can provide one strategy, use your cash management skills to compete!

Original - March 12th, 2009 · by Joe Fox

 

When the market speaks, smart companies respond quickly, shift their approach and thrive. So right now, at a time of unprecedented liquidity problems and declining top-line revenues, the market (i.e. your customers) are asking for extended payment terms in order to conserve cash. We can argue the merits of extending DPO, particularly if it puts strategic suppliers into financial straights. But there is no doubt that buyers are under pressure to extend their payment terms to preserve cash. They are doing this sometimes with and sometimes without your permission. Customers have spoken, they need to preserve cash. Now is the time to ask yourself if you can not only meet the needs of your customer, but also turn this into a strategic advantage….can you offer them extended payment terms?  If the answer is “yes”, it may prove to be a significant competitive advantage.

 

Selling companies that use a portfolio of working capital solutions enable their customers to maintain greater liquidity, strengthen the buyer/supplier relationship and show the market that they have the financial viability to ride out this recession. Talk about a recipe for taking market share from competitors!

 

Imagine calling all of you customers and your competitor’s customers to offer them longer payment terms, say add 30 more days pushing out to Net 60 or Net 90. Your customers will love it. They may even be surprised by your offer. They will appreciate that you are bringing up the idea…rather than asking to be paid early. The key is to use your portfolio of working capital solutions, including selling your receivables, so you still can be paid on time and bring in most of your cash at the normal Net Term date or even earlier. The small cost for selling your receivables can be considered an investment in your competitive strategies to keep customers and grow your market share.

 

Grow your business and take market share from your competitors while they are figuring out how to survive. It’s a win, win, lose situation for you, your customers and your competitors, respectively.

 

http://www.supplyexcellence.com/blog/2009/03/12/suppliers-offer-extended-payment-terms-competitive-advantage/