Monday, 3 November 2008

Cashflow and payment terms

You can’t have missed the furore in the press surrounding Tesco demanding that its suppliers accept payment terms extended to 60 days. A month back one of my largest customers sent me a similar ‘take it or leave it' demand upon my contract renewal. Their previous 30 day payment terms had meant 60 days in practice so I suspect I’ll be waiting 90 days now from the date of my invoice. There is really nothing I can do about it other than walk away from a contract which, at least, I know will pay me eventually (which is better than some other customers I’ve had)

I note from today’s edition of CRN that the practice is spreading with both Computacenter and DSG (owners of PC World) notifying their customers of extended 60 day payment terms. For many VARs, this could spell the difference between failure and survival. Getting an overdraft is hard enough for a VAR in the best of times – and currently it’s probably the ‘worst of times’ to try to negotiate an overdraft extension.

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