BIG Customers not paying on time?
For some suppliers, the biggest frustration is when large “creditworthy” clients insist on holding onto their cash beyond the supplier’s well established payment terms. In many cases, suppliers put up with this situation for fear of losing the business, and this puts a strain on their cash flow. One novel way of getting round this problem is offered by purchasing companies like Javelin Wholesale in London. In effect, the cash struck company makes specific purchases of it’s own supplies through Javelin. Javelin pays the supplier to their terms, but allows its client to enjoy extended credit of up to 120 days. So, if you have to wait 50/60/70/80 days to get paid, at least you aren’t put under pressure by your own suppliers to pay your bills on 30. One of the benefits of this new approach to safeguarding cash flow is that unlike invoice discounting, it doesn’t involve security i.e. no debenture or secured charges over your assets are involved.
This idea is a new one on me, but I’d be interested in hearing of anyone’s experience. What it does demonstrate is that where there is a need in the market, businesses will try to come up with new services that attempt to satisfy that demand.