Delay payment advantage

I have worked for a fortune 500 company for many years and was always baffled by their vendor payment terms.  A vendor may have provided a service or product in January, but the vendor would not be paid until April or May.  The payment terms were set as high as 60 to 90 days.  This means the corporation can gain additional interest with this money for an additional 60 to 90 days before paying the vendor.  It makes complete sense for the fortune 500 company when their vendor invoices are in the millions.  How does this relate the rest of us?


Each month when I pay my bills, I set payment for the date it is due and not a day sooner.  I would rather have the money sit in my bank for an extra day to generate an extra penny of interest than to have it shift to a large corporation to gain them more interest.  Just as importantly as not paying your bills too soon, you will also not want to pay them too late because they will charge you with a late fee.  If this does happen, it is always worth calling to ask them politely to remove it.

It sounds insignificant, but it is these types of habits that will get you into the right mindset to succeed financially.  You will want to get into the habit of keeping money in your possession as long as you can.  This includes not spending frivolously because people do get into real trouble when they start purchasing crap they don’t need.

This is a short post, but felt it was necessary to talk about.  Holding onto your money is important to do as long as possible.  Large corporations have tons of smart people creating advantageous ways to generate money and manage finances effectively.  In some situations it makes sense to adapt some of those methods in our own lives on a smaller scale to benefit from some of those methods such as delaying your payments.  This would be applicable to businesses too.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: