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by patwolf 2501 days ago
We recently did work for a very large corporation that switched from net 60 to net 180. I'm not sure if they did it for cash flow reasons, but I doubt it. We're a small company, so it was tough for us considering we'd be paying developers 6-months of salary before we'd see a dime. They did conveniently offer financing so that we could get paid sooner, albeit with interest.

It seemed to me like large corporations feel that they can strong-arm their vendors into unsavory terms because of their clout.
4 comments
cjrp 2501 days ago
> They did conveniently offer financing so that we could get paid sooner, albeit with interest.

That's blown my mind a little, charging interest on a loan of money which you owe to someone. Genius.

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52-6F-62 2501 days ago
Sounds more like a low effort scam to me...
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pas 2501 days ago
What do you mean switched? It's usually spelled out in the contract, no? And they can't just change it unilaterally, right?

So if they want to renegotiate, fine, the rate goes up by the interest (and or risk premium).

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4ntonius8lock 2501 days ago
I think they also know that the cost of onboarding new providers for large corporations is high, so vendors tend to price enterprise higher than SB, since they know there is more reporting and more hoops to jump through.

Personally as a self employed consultant, I'd take the financing. Not so much for cash flow (though it is a consideration), but just my overall paranoia toward not getting paid and always valuing a bird in hand. But I've been burnt before.

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altmind 2501 days ago
this seems like bank factoring - getting a part of your future account receivable now. some banks do that, not sure if the rates are any good.
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rapht 2501 days ago
This actually has got a name in treasury circles: it's called "reverse factoring". One of the very nice side effects is that when you're a big publicly traded company, you can generally afford to set up a dedicated entity to handle this business, which gets to be considered a financial entity by IFRS reporting standards, which (through a complex reasoning I won't bother you with) magically enhance your operating cash flow - one of the more important reporting metrics when you're not actually not a bank but e.g a retailer.
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