To Pay or Not To Pay – What Would Your Suppliers Say About You?

Posted on September 2, 2022


EDITOR’S NOTE: I came across this thought-provoking post on LinkedIn by Tom Mills in which he wrote: “Just don’t pay them on time 💰💪 – Not far off daylight robbery really is it? -☝️It might seem like a clever move to improve cash flow or macho way to show your supply base who is in control.”

He then wrote: “But here’s the untold damage to your organisation,” and provided an effective list against such practices. Of course, as I often do, I had to offer my perspective, which you can read below.

This post is an important topic, Tom Mills – especially given how different buying organizations responded to the COVID pandemic’s impact.

While some creatively looked for ways to keep cash flowing into their supply networks by paying earlier, most reverted to the familiar by asking for extended terms. Needless to say, that puts added pressure on their suppliers’ cash flow, forcing the latter to choose which customers to divert their limited resources to serve their needs.

Of course, even before the pandemic, studies such as one from the automotive industry were telling. The study found that manufacturers who paid their suppliers on time received the best from the standpoint of service and quality versus those that paid late.

The importance of paying on time or early is reflected in the US Government’s 2014 SupplierPay initiative based on their 2011 QuickPay program success.

In the context of the above, I recently moderated a panel discussion with Peter SmithCorinne Pohlmann and Ragnar Lorentzen with Duncan Clark in which we delved into the evolution and current state of buyer-supplier relations. I want to invite them to comment. 

I want to invite them to comment. Here is the link to the panel discussion:

What are your thoughts? How important is making timely payments to your suppliers – especially SMEs? What are the competitive advantages you will or have gained by doing so?


Posted in: Commentary