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15 December 2008 · Article

Wise working capital management: cash may be king. Just don’t kill your subjects.

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Pressured to stabilize profits and improve cash flow, too many companies are employing myopic approaches by putting the onus on the weakest links in the supply chain, namely, suppliers. In recent times, big companies have announced that they will extend payment terms with suppliers. Withholding cash will only increase the incidence of supplier bankruptcies, which are already at all time-high levels, and could negatively impact service levels and will certainly strain supplier relations.

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DREW HOFLER and TIM MINAHAN, Ariba

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(Photos: Drew Hofler & Tim Minahan)

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