120 Day Terms

Blueone

Blueone

Well-Known Member
SILVER Sponsor
Jan 24, 2007
13,790
Lake Erie, Ohio
Boat Info
2004 420 Sundancer
Engines
Cummins 6CTA 450's
I have a well known good profitable customer that is about 5% of my business which is still alot... He calls up yesterday and says he wants 120 day terms from the 30 day terms we have had for years. I said why stop there why not 240 days or go 360 days?... why are you fooling around with 120.... he wants a detailed reason why we cant extend terms.... he is now on COD...
My gut feeling is we haven't seen the total business impact of this pandemic yet ... I think things are going to get a lot worse before they get better.
 
Last edited:
Sad but when the virus is over on Nov 4th or maybe 5th, we can start picking up the pieces of this mess.
 
In the business that I'm in, we have simply seen a general decline in spending both in sales and service. While we deal with both research and industry customers, we have seen impacts in both areas - some positive and some negative. There are portions of research that are getting a funding boost because of COVID research and certain industries are continuing to grow. At the same time, there are research customers who aren't renewing service agreements for their non-critical instruments. We have not had any requests to modify terms that have come across my desk, though I haven't heard of this happening in other regions either (my region is the Central US).

Resiliancy has been a challenge for many businesses, and it sounds like that could be the case for your customer who is seeking 120 day terms. Free cash flow is quite possibly a big challenge given the way things have completely slowed down.

I thought it was interesting that United (quickly followed by Delta and American) have moved to eliminate flight change fees. With people not traveling anywhere close to pre-COVID volumes, if you can't compete you will soon have no business as people are forced into the most economical and flexible options to them instead of flying their favorite airline.

It will be interesting to see how this all plays out. As Cocktail Time said, hopefully we can get to Nov. 4th and move on. God forbid Biden gets elected, he's ready and waiting to shut down the economy again. Or I should rather say that his handlers and other Democrat Socialist operatives are. He's just a puppet at this point.
 
120 days is unreasonable for receiving payment. My experience has been in the interiorscaping industry and the norm from most suppliers is 90 days max and many are pre pay or COD only.

tough call with such a significant customer. Maybe demand to see his financials and if he is solvent then counter with 90 days terms to make him happy.
 
blaster said:
120 days is unreasonable for receiving payment. My experience has been in the interiorscaping industry and the norm from most suppliers is 90 days max and many are pre pay or COD only.

tough call with such a significant customer. Maybe demand to see his financials and if he is solvent then counter with 90 days terms to make him happy.
Click to expand...
I have 60 day terms with most of my big customers....but they pay for it...My suppliers now have to accept 60 days and they charge me for it and I pass it thru.... so theses customers think they are winning but they are paying for it...extended terms are a joke as far as I am concerned
 
Customers are always pushing without realizing the stress it puts on the their supply chain. I always tell them, if I can't buy material I can't make you parts. It sux.

But yeah, my company indicator is flashing Red, Red, Red. August was supposed to be a bounce back month. It wasn't. Sept. doesn't look like it either. Companies are not buying, even though it seems everything is in short supply. Nutty times indeed.
 
Unprecedented times, so what is normal is no longer relevant. Its a tough call. Support a good customer through a tough time and you build enormous loyalty. Support a bad customer and you have a write-off. In our business, we have some clients in strong financial position and some that are in real trouble. But when faced with these decisions it becomes apparent which customers you should support and which ones you should not.

The ones you are questioning are probably the ones that you should not extend.
 
Creekwood said:
Unprecedented times, so what is normal is no longer relevant. Its a tough call. Support a good customer through a tough time and you build enormous loyalty. Support a bad customer and you have a write-off. In our business, we have some clients in strong financial position and some that are in real trouble. But when faced with these decisions it becomes apparent which customers you should support and which ones you should not.

The ones you are questioning are probably the ones that you should not extend.
Click to expand...
The problem is how do you really know they are in a strong financial position... there is no way they are going to tell you the truth and I am just a supplier
 
Sounds like he's in a cash flow crunch and hoping things pick up later in the year? I'd be pretty leery.
 
Depending how important you are to him , perhaps a personal guarantee on the line?
 
We work with contractors and get that request on occasion, asking for 120 days. Not a chance, we're not a bank. We've done Net 45, but even Net 60 is pushing it. Our manufacturers are on a Net 30 for raw materials, so it rolls downhill.

However, the majority of contractors we deal with typically have the cash to cover the material cost on their end, and then bill their customers in phases to cover costs.

Asking for a detailed reason why is odd, when almost all business operates at a Net 30. I'm not sure what business you're in, but I imagine you have costs (duh o_O) and have 15 or 30 days to pay those bills. Maybe ask him if his employees are fine being put on a Net 120 for paychecks.

Sorry, you did say he was a good customer.........
 
I'm a bit surprised to see the stock markets continuing their upward climb as they have with all the negativity you guys are seeing. The Dow is up 53% from where it was at the bottom of the drop on March 23rd.
 
Gofirstclass said:
I'm a bit surprised to see the stock markets continuing their upward climb as they have with all the negativity you guys are seeing. The Dow is up 53% from where it was at the bottom of the drop on March 23rd.
Click to expand...
It just doesnt make sense...thats why I think things will get worse before they get better
 
If companies are just now pushing past 90 days they are way behind! 90 days was what the cool kids were doing in 2008.

10 years ago I worked for a Siemens operating company that had average days outstanding of over 100 days. That was our average. We had many suppliers at 180+ day terms. It was glorious for working capital and suppliers priced their services accordingly.

A shrewd supply chain move for 2020 is to attempt to push terms to an uncomfortable level and then offer a p-card for payment as a "quicker", less painful alternative. Get the compounding term on the payment, get a rebate from the card issuer, it's winning all over the place :)
 
At 120 days seems to be a lot at risk. You now have 3 to 4 times more invested in their business... We parted ways with a 15 year client recently because it was not working. I tend to agree things are going to be tough for some time unless you are in one of the areas booming due to bored people...
 
I am in the construction world and 120+ days is pretty typical, even worse when you are a subcontractor of a subcontractor. It has been happening for many years with the larger corporations. We pay out at 30 days and have a couple subcontractors that adjusts their prices accordingly between us and a contractor that pays slower. Good on bid day!
 
Yeah, it seems the bigger companies are the ones pushing 90-120 day terms. I laugh and say "no quote."
 
Golfman25 said:
Yeah, it seems the bigger companies are the ones pushing 90-120 day terms. I laugh and say "no quote."
Click to expand...
And screwing all the little guys. Try getting paid by some of these defense contractors. Count your blessings if it’s less than 120 days.
 
You must log in or register to reply here.

Forum statistics

Threads
113,117
Messages
1,426,412
Members
61,029
Latest member
Curious
Back
Top