Something to Consider July 2018 – P2P Gets Strategic: Extending Payment Terms to Free up Cash
Financial chiefs at U.S. companies are holding back payments to their suppliers for longer than at any point in the past decade, a push that is helping them keep more cash on hand that otherwise would be tied up in their businesses.
The 1,000 largest U.S. public companies increased payment terms to 56.7 days in 2017, from 53.3 in 2016, according to a study to be released next month by consulting firm The Hackett Group Inc.
This is an interesting trend that not all companies are onboard with. Whilst a KPI around working capital will be consistently high, a KPI about getting early payment discounts will be dropped. It all depends on a companies current priorities and business goals.
Read the full article here to learn about the specific experience of companies like Stanley Black and Decker and HanesBrands Inc who are currently utilising this tactic and reinvesting in other business priorities
Our ‘Something To Consider’ snippets are framed as small, digestible, ‘dashes of insight’ around the pillars of what we define as “World Class Finance” – Process Optimization, Financial Control and Compliance, and Risk Assurance, all underpinned by technology enablement and integration.