Have you ever wondered, as you stare at cashflow spreadsheets, when the stretching of payment terms began. Maybe it’s ever been thus.
I did read somewhere that in the early nineteenth century Beau Brummell pushed his payment terms with a supplier of fine snuff to more months than it takes some big corporates to get around to opening their wallets.
We know that the bigger the business the longer it takes to pay because it thinks it has the muscle? Perhaps the more pertinent question is why it’s allowed?
It’s not uncommon for small companies to be asked for 60 to 90 days payment terms, which is a nonsense.
Any company that accepts 90 days means a job in January doesn’t get paid for until the beginning of June, pushing the supplier to carry the bigger firm’s costs for over three months with all the extra financing that requires.
I know some small business owners give a wink and say they add the cashflow cost to the bottom line, but come on it’s just plain wrong. Big or small, you contract for a job, carry it out and should be paid, as the law states, on 30 days.
My campaign to say ‘NO to 90 days’ starts here.