When we discuss payment terms and managing cash flows we are faced to deal with the needs of our customers. I have had experience with companies who say that their customers ask for 6 month payment terms. 6 months! Imagine trying to accommodate your own business within the same cash supply timeframe and producing, paying bills within the 6 month period. When I dag further I realized that those companies were themselves in a tight spot since they’re customers were enforcing longer payment terms and so on. It sounded like a vicious circle. Furthermore, there are countries that require certain taxes to be paid upfront for the whole year and the amounts are based on expected sales volumes and what not. Where does the money come from? It’s a cycle and at some point your company is going to part of it. 

So as you’re faced to deal with it, you have to come up with means of your own – being strict with your customers up to the comfort limits of both of you, trying to enforce longer payment terms with your suppliers, applying for a credit facility to fund the period between when you need money and when you’re paid or factor your receivables.