What’s behind this financing model – and why is it so relevant for companies?
What Is a Supplier Credit?
Supplier credit arises when a company receives goods or services but does not pay the invoice immediately. Instead, payment is made after a defined payment term. In effect, the supplier grants the Bayer a short-term loan – without involving a bank, without interest, but with clearly defined deadlines.
common Payment Terms
- 14 days net
- 30 days net
- “10 days with 2% discount”
Why Is Supplier Credit Important?
Supplier credit acts as a liquidity buffer:
The company can use or resell the goods before paying for them. Especially in accounts payable, this is a key lever to:
- manaage payment flows strategically
- take advantage of early payment discounts
- safeguard liquidity
Real-World Example
An event technology provider delivers equipment for a corporate event. The invoice comes with a 30-day payment term. The company uses the equipment, generates revenue – and pays later.
Effect: No immediate cash outflow, but full operational benefit.
Conclusion: Risks and Limitations
Supplier credit offers flexibility and liquidity, but it’s not without boundaries. Companies that consistently miss payment deadlines risk:
- late payment fees,
- less favorable terms,
- or even being blocked by the supplier.
From an accounts payable perspective, this makes active payment management essential. What does that mean in practice?
- Clear responsibilities within the invoice workflow
- Automated reminders for due dates
- Digital tools that track payment terms and discount windows
Only when these elements work together can supplier credit unfold its full potential:
As a smart financing tool that supports operational efficiency without creating financial or reputational risks