This trend particularly hurts smaller companies that may not have access to credit lines. Once they have delivered goods, or implemented services, they often cannot afford to float the business for a big client. As such, they might have to decline the business. In the end, it hurts big clients because less competition will usually result in higher prices. In addition, smaller companies are often more flexible and more innovative than bigger companies, so what the client may find over time, is less flexibility and higher prices as the trade off for longer payment terms.
All companies need cash in the door as soon as possible to fund operations. So the goal of every supplier is the shortest payment terms possible. That could mean 30, 45, 60 or 90 day payment terms; but usually not longer. In some cases, suppliers may provide a discount for quicker payment terms, recognizing the cost of money. Whatever the arrangement, this is just squeezing the balloon. It would be a fool's game to assume that longer payment terms do not impact the price of goods and services, one way or another. Failing to recognize this factor is a road to bankruptcy.
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