Chapter 3 Understanding trade
cash flow. In response, the customer
may choose to source from a competitor
offering better payment terms, putting
the supplier’s business under threat,
especially if the counterparty is a core
customer. However, the supplier will need to
consider any information that its customer’s
creditworthiness may be weakening, in which
case an attempt to make them pay earlier
may be the most prudent course.
Certainly it is important that companies
protect their own interests in trade.
However, as technology allows companies
to collect and collate more informationabout their counterparties and also to
share information along the supply chain, it
is increasingly possible for all participants
in a supply chain to cooperate to their
mutual advantage. Companies increasingly
see the physical and the financial supply
chains as a set of cooperative processes,
where all parties are able to agree mutually
beneficial terms.
The next chapter looks at ways
companies can cooperate to improve the
efficiency of both supply chains, allowing the
end product to be as competitive as possible
in the market.