Not surprisingly, in the current economic climate, late payment is on the rise. Cash-flow is king, and companies can ease cash-flow problems by delaying payments to suppliers, effectively borrowing money from them at 0% interest. This article illustrates the problem nicely:-
http://www.businesszone.co.uk/topic/finances/firms-forced-shed-staff-late-payments-bite/50949
We take a dim view on this – I was brought up to avoid debt wherever possible, and I believe that if a company is having problems they should borrow from the bank, not from their suppliers!
What is pleasing, however, is that as a supplier we don’t seem to be suffering too badly from this. We have a simple policy – we won’t supply to late-payers. Most of our clients are very good at paying on time, and on the odd occasion that we have to take action, they quickly get the message.
Of course we are very happy to tailor our terms to their needs – for example if they only do a payment run once a month, we can change our invoice terms to suit that. But we won’t let them take the mick….