What are a few days on payment terms worth?
See the one-off cash released by paying suppliers a little later or collecting from customers a little sooner, what that cash is worth each year, and what the change costs your suppliers, so you can offer something fair in return.
This is an estimate from the figures you enter. Nothing you type is sent anywhere unless you choose to send it with the form.
Change supplier or customer terms to see the cash effect.
The sums, in plain sight.
Cash from supplier terms = annual spend / 365 x the change in days. Cash from customers = annual credit sales / 365 x the reduction in collection days. Both are one-off: the cash comes in once, as the new terms take effect.
What the cash is worth each year is the one-off amount times your cost of funds. What longer terms cost your suppliers is the same amount of their money, times their cost of funds; expressed as a share of spend, it is the early-payment discount that would leave them no worse off.
The default cost of funds starts from the Bank of England Bank Rate of 3.75% and adds a typical lending margin. Use your own rate if you know it.
Release cash without damaging relationships.
BankStreet negotiates terms and runs working capital programmes, paid from results.