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It's time to consider payment terms from the perspective of supplier chain management

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Recently OpusCapita carried out a study of the payment terms offered by the biggest companies in the Nordic countries. The study showed that payment terms seem to be slightly longer in Finland than, for example, its neighboring country Sweden.

Forty percent of the Finnish companies interviewed currently offer payment terms of at least thirty days. However, what is interesting is that half of the companies interviewed said they were planning to extend their payment terms. Correspondingly, in Sweden less than a third of the companies were planning to extend their payment terms.

Lengthening payment terms is one way of boosting working capital. Compared with Sweden, Finland has, for a long time, been focusing on making its invoice processing as efficient and automated as possible. This means that various cash discounts do not get used a lot of the time. Now would be a good time to consider this issue from the perspective of supplier chain management, not just automation. The purchaser would also benefit by securing the financial position of its suppliers who are critical for business, and also its small suppliers.

In southern Europe, long payment terms are common today. However, they do use a much more versatile selection of methods to secure their supplier chain than we do here in the Nordic countries.For example, self billing, dynamic discounting and supply chain financing are concepts that are still largely unknown in Finland. One thing that these terms all have in common is that suppliers of all sizes receive their money more quickly.

There are alternative options for improving the financial position of SMEs. In the future we should concentrate on extending our selection of methods.

petri (1)

Petri Karjalainen
Country Manager Finland, OpusCapita