Why flexible terms of trade win in today’s dynamic market 

Whether it’s a black swan event that impacts the entire world or a challenge unique to your industry, the current market is volatile and increasingly unpredictable. In recent years, economic factors such as inflation and rising interest rates have squeezed margins. Supply chain disruptions and evolving customer demands make it more difficult to stay current and compete. To address these challenges and gain efficiencies, many businesses have digitised their payment systems and processes. And while digital payments are one step towards making it easier to complete transactions, offering more flexible terms of trade is the next step in delivering a sophisticated payment experience and boosting cash flow across the supply chain. Keep reading to learn why offering flexible terms of trade will give your business a competitive edge. 

Why traditional payment terms struggle in today’s market 

Fixed payment terms can take many forms. They typically include a set date when payment must be made in full using a limited number of payment options, such as electronic funds transfer (EFT). Limiting how and when customers can pay may hinder your business’s ability to be agile and continue growing in a dynamic environment. It can also limit the number of suppliers and customers willing to work with your business, tighten cash flow and result in missed opportunities.  

To combat these factors many businesses buy trade credit to engage with customers. It’s estimated that 59 per cent of Australian businesses rely on trade credit. And there was a 35 per cent increase in trade credit to B2B customers in the first quarter of 2024. This reliance on trade credit increases financial risk and provides limited control and visibility over cash flow. Companies should be looking at innovative ways to bring flexibility to their payment terms, systems and processes. 

The power of flexible payments 

There are several ways your business can bring flexibility to its payment terms and options using solutions that benefit both parties in every transaction. Early settlement discounts, for example, allow customers to access a discount if they pay their invoice before the due date. This boosts the supplier’s cash flow through faster payment and helps the customer save money. Similarly, offering a broader range of payment options, such as credit card payments, or access to third-party finance gives businesses more flexibility over how and when they pay 

The benefits of flexible terms of trade can be realised across the supply chain, such as: 

• Improved supplier relationships and collaboration: Having the ability to collaborate on payment terms and options on every transaction makes working with suppliers and customers more productive as each party benefits from how the payment is processed. 
• Enhanced cash flow management and control: Using digital solutions to provide flexible payment terms improves cash flow management and control by allowing businesses to gain better visibility over how and when they will be paid. 
• Reduced financial risk: When a customer uses third-party finance to access more flexible payment terms, the financial risk for the transaction shifts to the finance provider, increasing certainty and reducing the financial risk of relying on traditional trade credit. 
• Increased negotiation power and access to better deals: By taking advantage of flexible payment options, you can not only strengthen cash flow, but benefit from the ability to access volume discounts where applicable.  
• Greater ability to adapt to changing market conditions: When your cash flow is more proactively managed, and you have strong relationships with suppliers and customers, it’s easier to adjust your products and services to adapt to changing market conditions, such as introducing or removing offers and incentivising customers to choose your business over your competitors.  

Embrace payment agility with Spenda 

With different uncertainties present in the market, it’s becoming increasingly important to have flexibility in your trade and business relationships. Not only can this reduce your reliance on trade credit to make sales — an option that carries significant financial risk — but it can also provide a greater ability to proactively manage your cash flow when challenges arise. Integrated payment technologies, such as Spenda, provide businesses with the tools they need to strengthen their cash flow, provide a better payment experience to customers and gain more control and visibility over how and when they get paid by offering flexibility.  

Spenda is an integrated business platform that enables businesses across the supply chain to sell better and get paid faster. We serve as both a software solutions provider and a payment processor and deliver the essential infrastructure to streamline business processes before, during and after the payment event. Our connected platform displaces multiple disparate systems in favour of one collaborative solution that improves transactional efficiency between businesses.