APQC is conducting research on why big companies are squeezing their small suppliers by paying invoices later and later. Nick Araco, CEO and Co-founder of The CFO Alliance, a private community of finance leaders, told APQC that small and medium-sized CFOs “are getting frustrated. They are being backed into a corner.”
APQC is interested in how this trend may impact both suppliers and buyers—and how it might eventually impact the U.S. economy. Please help us untangle this situation and send a message to the S&P 500 companies who can, but won’t, pay small suppliers within a reasonable timeframe. Please click on this link to complete our confidential survey.
This issue, Araco added, was of “moderate concern six months ago, but it is now ballooning into a major worry for companies that want to boost shareholder value but find it hard to have a positive relationship with their largest and most valuable customers.” Some may have no choice but to throw in the towel on those customers – or just put themselves up for sale, he said. It’s not hard to imagine the risk to the U.S. economy as a whole if small and medium-sized companies, which are the engines of job creation, are systematically thwarted in this way.
The truly vexing part of all this is that most large companies are sitting on big cushions of cash. Why squeeze suppliers when you’ve got the cash on hand – and no good options for investing that spare cash over the short term to pick up a bit of interest income? Early APQC research finds, well, something of a herd mentality taking form, prompted by the aggressive demands of activist investors. We’ll keep you posted on our full findings.