I totally agree with Serena Ng. You can read the full article at WSJ.com. Big companies have always taken advantage of their size. Walmart and McDonalds are known for exerting this type of control over their suppliers. Here on the West Coast, Fry’s Electronics has flexed it’s muscle in when it pays for goods. This is the nature of supply and demand. As a small company, you want the business with these large buyers but there are drawbacks and payment terms can be one of them.
There are ways to combat these tactics. You may be able to pass some of the lengthening payment terms on to your suppliers. You can attempt to increase your pricing to make up for the time value of money. If cash flows are a real issue, you can factor or establish a bank line of credit. These two methods cost you money that eat into profits, if you cannot pass on the costs. However, this is normally better than loosing the business. Browse the rest of the web site for more information on combating your big buyers.