The hidden working capital threat

The biggest threat to a company’s working capital strategy hides in sales contracts, not overdue invoices.

Finance automation vs. sales terms

Finance can automate collections and accelerate reconciliation but extended payment terms negotiated by sales teams erase those gains.

Payment terms cost millions

A 15-day increase in collection period for $500 million in annual credit sales ties up $20.5 million in cash, costing $1.6 million annually.

Commercial decisions override finance

Extended payment terms can appear inexpensive to close deals but ultimately offload financing costs to treasury and CFO office.

Two types of working capital pressure

Customers paying later than agreed is an execution problem while customers paying exactly when contracts permit is a commercial policy decision.

WEX product manager explains

Ryan Taylor, SVP Product Management at WEX, says manual stitching of work and payments creates delays and errors as volume grows.

“The core problem is work happens in one place, and payments happen in another. People are stitching that together manually, which can create delays and errors as volume grows”

Strategic payment management

Companies should treat payment terms as strategic financial variables rather than standardized policies to avoid liquidity demands.