We’ve seen buyers pushing supplier payment terms out from an average of 45 days to 90 days and beyond! It’s opportunistic given the fragile commercial climate, with large companies leading the trend. The pressure it puts on cash flow can jeopardise a business. We list some new possible options that might help bridge the gap.
1. Refuse – decline your customers offer to extend payment terms on the basis that goods are purchased under your terms not there’s. Easy to say, very difficult in practice, but worth listing. If your products or services are vital and alternative suppliers limited then you may negotiate ‘special’ terms.
2. Supply Chain Finance – check with your buyer if your customer is large (supermarket, construction group) to see if they offer a Supply Chain Finance Scheme. These often appear too good to be true as they have so many advantages and only one or two restrictions. Low rates (E.G. 1% over LIBOR), non recourse, (cash improvement), risk is with the buyer, no facility fees …. We would be happy to explain more. Just call us on 0845 018 0700.
3. Single Invoice Finance – until recently an expensive alternative to overdrafts and regular factoring. These facilities have matured, become easy to access and can allow you to dip in and out when you need it rather than sign a long term agreement. We would be happy to explain more. Just call us on 0845 018 0700.
4. Peer to Peer Lending – an online protal allows multiple investors (looking for a better return) to advance funds to a business. The rate will be determined by the investors who choose the lowest rate they are willing to lend at based on the proposition and potential risks. There are fees. To find out more feel free to call us.