Solving Late Payments with Supply Chain Finance

Supplier late payments are a pain point in the buyer-seller relationship that poses a challenge for businesses. Determining business growth trajectory and potential is based solely on the inflow and outflow of cash into a business. Disruption in that cash flow can further disrupt the flow of materials and ultimately afflict the supply chain.

According to Wall Street Journal, many businesses are currently negotiating longer payment terms after getting used to them during the pandemic. In addition, Hackett Group Inc. revealed U.S. companies on average took 58 days to pay suppliers in their first quarters of fiscal 2021, up 5.5% from 55 days in the comparable period last year, according to their research.

Late payments are by no means a new problem, but the extension of longer and better payment terms is causing a squeeze on vulnerable small business supply chains.

“Companies, however, must walk a fine line between pushing for better payment terms and imposing financial strain on their suppliers," said Andrew Schmidt, an accounting professor at North Carolina State University. “It’s a double-edged sword.”

So, how do we solve the late payment problem? How do we accelerate the payment cycle? How can TradeRiver help?

At TradeRiver, we accelerate client growth by bridging the revenue cycle. Our client-tailored supply chain finance funding solutions directly combat the late payment conundrum. Supply chain finance is a valuable tool for buyers and sellers alike. The solution is especially valuable amid cash flow crunches which can quickly lead to payment delinquency. Suppliers can worry less about payment terms and maximize flexibility.

Learn more about our funding solutions to bridge cash flow gaps and maximize flexibility here.