Firms to delay payment to suppliers

27 July 2008
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28 July 2008 | Jake Kanter

Nearly half of the companies who took part in a recent study by KPMG said they plan to negotiate longer payment terms with suppliers.

Of the 342 firms surveyed in the US and UK, 49 per cent wanted to extend billing times to tackle cash flow problems amid the economic downturn.

The report also revealed 75 per cent of respondents in the UK are experiencing delayed payment from customers, compared with just 23 per cent in the US. Some 73 per cent of UK firms said their vendors were demanding early payment. This was much higher than in the US, where only 12 per cent had similar requests.

Almost all the companies - 96 per cent - forecast their future cash flow, but only 10 per cent said they are accurate.

Andrew Ashby, director at KPMG advisory services, argued that adopting the "same old blinkered approach" of squeezing suppliers will achieve very little. "Companies need to be more focused on gaining improved visibility and control of cash, and to work smarter across the supply chain."


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