Many companies seek to delay their cash disbursement process, pay their obligati

Question

Many companies seek to delay their cash disbursement process, pay their obligations slowly to improve their cash flow. Most, however, use bank products to ensure timely payment of obligations and search for ways to deliver payments as quickly and efficiently as possible. Most of you use bank products that allow you to pay quickly and with little effort in your personal life. What is the benefit for you or for a company to make the payment process efficient? Why not slow your payments down and use complicated methods so you hold your cash longer?

Explanation / Answer

The benefit a company gets if its makes payment process efficient is that the working capital is managed efficiently. The suppliers will provide goods at discount price if we pay on time. If we delay payment it will be beneficial working capital management but the trust will be lost so paying as per payment terms is good process to be followed.

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