Supplier Bullying: Cutting the Branch You Are Sitting on?

Cutting the branch you are sitting on shutterstock_171880337

There has been a lot written lately about the erosion in payment terms to suppliers and the risk it presents to the economy.

It’s easy to see why undermining suppliers is counterproductive and risky for any company. There is also concrete evidence that shows companies with good supplier relationships perform better in the long run. At the same time, it is probably unrealistic to expect big businesses that wield enormous buying power to “simply pay all suppliers within acceptable terms” when the stock market rewards them for higher DPO. Government regulations are also unlikely to work, as companies will always find ways around them.

What we need are innovative supply chain financing solutions that remove the existing barriers. There is plenty of capital that can fill the trade financing gap, but complexity and lack of transparency elevate the risk associated with such transactions and therefore the cost of capital. We need new financing solutions that increase transparency, reduce risk and cost of capital, and present a win-win proposition to all sides.

A new whitepaper by David Gustin of Trade Financing Matters offers some innovative solutions – you can download it here.

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