In the last workshop, we considered the financial and ethical implications of extended pay terms with suppliers. While some people tend to view accounting and finance as black and white, with set rules that govern decisions, reality is much more complex. It is not always immediately clear which alternative best aligns with stakeholders’ interests, and we are often placed in the uncomfortable position of balancing competing interests. The decision to lengthen pay terms is a perfect example of such a dilemma. Each alternative has tradeoffs, and these tradeoffs would be viewed differently depending on your perspective. As a decision maker, your challenge is to be able to consider multiple perspectives and to fully understand the arguments for and against a position. With this assignment, you will have an opportunity to stretch your critical thinking and more fully consider the implications of a supplier pay-term decision. Be prepared to have your position challenged. You may even change your mind!
Upon successful completion of this discussion, you will be able to:
In the previous workshop, we learned more about cash flow and its critical importance to every organization. In this workshop, we dig deeper into the accounting process for recording financial transactions. When a company increases the time period it takes to pay its suppliers, it will result in an increase to its accounts payable, a credit. This credit is offset set by an increase to its cash account, a debit. Good cash flow can be used to fuel growth or simply as a safety buffer against the unexpected. Many real-world companies use this strategy, extending pay terms to 120 days or more.
However, the impact to the supplier’s books is exactly opposite to their customer’s. When a company has to wait longer to receive payment, its accounts receivable will increase, a debit. The corresponding credit is the decrease in their cash account. Whatever cash flow gains are made by a customer are exactly offset by cash flow losses at the supplier. It is a zero-sum game.
Suppliers also carry the risk of non-payment. Research has shown the longer a customer takes to pay, the less likely they are to pay at all. In order to maintain their cash flow and to help manage this risk, suppliers will sometimes make special arrangements called “factoring” or “invoice discounting.” However, such arrangements are often expensive. Then suppliers have to decide whether they should bear the cost alone, hurting their profitability, or try to pass on a price increase to their customer.
The stakes are high. Some suppliers have chosen to “fire” their customers rather than accept lengthy pay terms. This leaves the customer with fewer supply options. Other suppliers simply don’t have any choice but to accept the terms of their critical customers. A powerful customer can feign indifference right up until the supplier succumbs to the strain, resulting in declining quality or a disruption to their operations. These are but a few of the tradeoffs that must be considered when making pay-term decisions.
Why Work with Us
Top Quality and Well-Researched Papers
We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.
Professional and Experienced Academic Writers
We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.
Free Unlimited Revisions
If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.
Prompt Delivery and 100% Money-Back-Guarantee
All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.
Original & Confidential
We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.
24/7 Customer Support
Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.
Try it now!
How it works?
Follow these simple steps to get your paper done
Place your order
Fill in the order form and provide all details of your assignment.
Proceed with the payment
Choose the payment system that suits you most.
Receive the final file
Once your paper is ready, we will email it to you.
No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.
No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.
Admission Essays & Business Writing Help
An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.
Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.
If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.