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Survey of late payment practices shows damage to suppliers

Research firm APQC, Houston, has released the report “Customers with Clout Squeezing Suppliers,” which highlights the results of the firm’s survey of how late payment practices affect suppliers.

The results show that large companies that began forcing extended payment terms on suppliers in response to the 2008 financial crisis are still extending payment terms as a matter of policy, thus creating significant and sometimes dire consequences for their suppliers.

As a consequence of late payments, many suppliers report having to take on additional debt to fund operations. They are unable to expand, hire, or give their employees raises.

Other findings from the 105 executives and small- business owners who participated in the survey are:

  • 72 percent said consumers will likely face price increases as a result of continued extended payment terms.
  • 72 percent believe the continuing practice of late payments will ultimately result in higher prices for their customers.
  • 57 percent believe either they, or other suppliers, likely will be forced from the market as a result of extended payment terms.
  • 55 percent said they cannot hire more workers because of late-payment practices.
  • 54 percent said they probably won’t be able to expand their business because of late-payment practices.