Chart of the week – Payment terms and Early Payment David Gustin - May 23, 2014 10:52 AM | Categories: Trade Credit Commentary | Tags: dynamic discounting, Payment terms, working capital Customer demand for trade credit requires sellers to provide free and flexible funding for their customers, in essence “Giving customers a free loan!” But looking at the 2013 REL Working Capital Study below, we find that for all we hear about large U.S. companies extending payment terms, partly due to working capital programs stemming from the Great Recession, the data below say terms are not onerous. There should be some caveats in the data, as we know payment terms can vary greatly by industry, and also by industry sector (for example, in retail, payments tend to be cash or credit so payment is immediate). In international trade, terms can be much longer. Various goods procured demand immediate payment (for example, fuel suppliers, freight vendors). We also know there is a big difference between payment terms and when you get the cash. The question than becomes do suppliers want to discount invoices if there are only 25 to 30 days until payment value date. What we have found is the answer is a resounding yes, and that is real data talking, not surveys! Related Articles Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of new posts by email.