For a small supplier, this creates a real cash flow gap — wages, stock and operating costs still need to be paid immediately, even while the business waits on a large customer's payment cycle. This mismatch is one of the most common reasons growing small suppliers run into cash pressure even while winning bigger contracts.
Source: Corporate Finance Institute
Frequently Asked Questions
Why do large companies use long payment terms?
It helps larger companies manage their own cash flow, often at the expense of smaller suppliers further down the payment chain.
What can a small supplier do about long payment terms?
Options include negotiating shorter terms upfront, invoice discounting, or purchase order funding to bridge the gap between delivery and payment.
Is there a tool to help plan around this?
The Purchase Order Funding Toolkit – South African Edition helps you model the real cost of funding an order against a customer's payment terms before you commit.