Even some of the largest enterprises struggle with cash flow management, and new reports from BloombergView say those hurdles are preventing corporations from paying their small suppliers on time.
Reports Wednesday (Sept. 30) said that new data from online retail behemoth Amazon reveals just how long it takes the company to pay its small business partners — and it’s higher than Walmart and Costco.
The statistics come as Amazon looked to provide insight into its cash conversion cycle, which ended up being negative 24 days last year — meaning the company, on average, received payment from customers 24 days before it paid suppliers. That figure has dropped down to negative 40 days before, the data revealed.
Amazon reportedly chalked up the cycle timeline to a fast turnover of inventory. But according to BloombergView, it can be more accurately explained by Amazon’s payment terms with suppliers and the company’s use of these payment terms to fuel growth.
In 2014, it took Amazon about 90 days to pay its suppliers. That compares with the less than 40 days it took Walmart and the 30 days it took Costco to settle their supplier invoices.
Reports said that while Walmart and Costco have to deal with fewer suppliers than Amazon does, the article also declared that Amazon “is also clearly making a choice to boost its own cash flow by making life harder for its suppliers.”
But Walmart has come under attack from its suppliers, too, since reports emerged recently that some Walmart supplier partners have filed legal action against the retailer for allegedly unfairly seeking longer payment terms in supplier contracts.
And it’s not just consumer retail, either. Reports highlighted the lengthening periods between invoice receipt and payment among other major corporations, including Mondelez, Kimberly-Clark and Procter & Gamble, each of which took longer than 70 days on average in 2014 to settle supplier invoices.
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