For median performers, it can be up to 100 days. The implication here is that companies need to pay their suppliers quickly, collect from their customers just as quickly, and move inventory continuously. In today's world of collaboration, however, that is no longer a viable tactic. Supply chain integration and electronic payments require a close working relationship among all parties. It now is in everybody's best interest to keep payables down.
Suppliers act less flexibly with companies that pay slowly.
Slow payers have the disadvantage of taking on more inventory or having longer order-fulfillment leadtime than companies that pay promptly. Similar dynamics are at work on the customer side. If your customer really wants you to be a supply chain partner, that customer will pay you within a reasonable period. Steve Geary is service director for the Supply Chain Management Benchmarking series conducted by PRTM's Performance Measurement Group . Jan Paul Zonnenberg is a principal at PRTM .