The lines of credit see-saw discussed in earlier posts continues to make press, with The Times today reporting that “Big companies are delaying payment to smaller suppliers by more than 100 days in the biggest squeeze on small firms' cashflows since the early 1990s”. 

The Federation of Small Businesses (FSB) says that the situation has worsened dramatically in the past few weeks, with some members facing a wait of well over three months to be paid for goods or services provided.

A major new concern, however, is that big companies are starting to formalise longer payment periods, rather than merely settling their bills later in an ad hoc way Stephen Alambritis, the FSB's head of government affairs, said: “Many seem to be using the credit squeeze as an excuse to put in place permanent arrangements for long payment periods.

It’s a dangerous road. In our experience buyers that use collaborative procurement tools to strengthen rather than damage relationships are the ones who prosper best in both good times and bad.