Imagine a world where suppliers and buyers exist in perfect harmony, pay each other at the right time, without being chased and in the most efficient way for both parties. It doesn’t sound so ridiculous but it’s a long way from the reality of the situation. But how good would that be for the economic life of the country?
We rely on small businesses – they are the backbone of the economy. But winning the contract to supply a large customer can be a double-edged sword as these corporates often manipulate their own working capital by delaying their supplier payments. In fact they often have whole teams of people dedicated to doing just that.
This is so short term and bad economics. It ignores the fact that small businesses survive on cash flow and any delay in supplier payment directly impacts the livelihood of everyone involved – owners, employees, their suppliers and the government (tax). The food chain, as the term suggests, is inexorably linked.
Aside from displaying a social conscience, this must be about simple common sense. When suppliers get paid earlier, they stay in business, this keeps more people employed and enables them to buy goods and services from other businesses. This is Economics 101 and yet we have an industry out there that clearly does not understand the ebb and flow of working capital. Scary!
Please let us all grab hold of the issue and start to make a difference. Think of everyone in the food chain. Think of the ramifications for shutting down the lifeblood of business. Actually, why not think of something other than your own short term bank account?
Being ruthless in business doesn’t mean exploiting your supply chain. It means working together to create real, sustainable competitive advantage. Using automated tools allows you to manage all supplier interactions from a single platform. You control your processes, you manage your own cashflow and ensure all parties are managing the best outcome for the economy.
It’s not so ridiculous – there are solutions out there that make this happen.