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Really? And here I always thought enterprises pay at the last minute (or late) in order benefit from inflation. If you have lots of money, then even benefiting from a 0.0001% inflation is worth it.


It's a combo of all those things: inflation, improving the cash flow cycle, and even internal rate of return (i.e. for those 60 days the money is hopefully being used in a capital efficient manner).


I'd say it's mostly because "that's how it's always been", and because they can.

That's how it's always been, because before computers, it typically took 7-10 days to process through company procedures and banks.

And the cash flow cycle / rate of return is laughable in today's ZIRP environment. Especially if you are bigcorp, you can pay at Net+0 and take a loan at ~0% (+/- 0.1%) yearly, which translates to ~0.02% over 2 months, if you so wanted -- and no one would notice.

When I did contracting, I would happily give a 5% discount to get Net+0 -- in fact, a couple of times I raised my rate 10% a-priori and offered a 10% discount if they paid Net+0 instead of Net+30 (the latest I was willing to accept). None eventually accepted; One tried to get it through their bean counters and couldn't - the Net+X for X>30 is so deeply ingrained into most accounting departments that it can be considered an axiom, regardless of how little financial sense it might make in a given case.


swombat is right, and to add one small bit: when we pay late, it is nearly always due to an unforeseen lapse or issue with payment, and that's it. To give you an idea, we have over 8,000 suppliers, where our spend ranges from <$100/yr to $>1,000,000,000/yr. That's a lot of terms and payments to keep track of, and things occasionally break (on our end or the supplier's). For big customers with whom we use standard B2B EDI transactions, we have multiple internal instances of different B2B platforms and work heavily with those suppliers to test an ensure stability, and we coordinate with their engineering teams on upgrades, outages and configuration changes. Ditto that on the bank interfaces.




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