Question: I have contracts with very large companies and they are pushing payments out to the 120-day limit. Some of them offer shorter payment cycles but I have to accept a discount on the amount owed to me. How’s a small business supposed to survive with this kind of pressure on the bottom line? Should I take these discounts for the sake of my cash flow?
Answer: Your question illustrates one of the reasons it’s so tough for small businesses supplying big companies. While larger vendors probably have at least some negotiating muscle with clients such as big box retailers or giant manufacturers, small suppliers usually don’t—unless their products are absolutely unique in the market.
Your dilemma: You need the business the big guys are offering, but that means you have to accept it on their terms—even if they don’t want to pay you for four months.
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