Re:Why Don't People Manage Debt Better?
by HeyLaughingBoy on Friday February 19, 2016 @01:28PM
(#11135409)
so in my mind, what we want to do is get the "interest-free loan" from our supplier of equal or greater duration to the credit term we give our customers
Yes, you got it :-) Although it doesn't always work in practice. As a small business, I have a UPS account with net-7 terms (they bill me once a week).
This is not normally considered debt, though. It's a liability, but there is no formal loan agreement. I may have a customer push payment out to 90+ days and I end up getting the same amount as if he had paid me within 30 days as agreed. So if UPS charges me $100 to send them an item overnight, but they don't pay me the $5,000 for that item for 3 months, I still have to pay UPS within 7 days.
Yes, you got it :-) Although it doesn't always work in practice. As a small business, I have a UPS account with net-7 terms (they bill me once a week).
This is not normally considered debt, though. It's a liability, but there is no formal loan agreement. I may have a customer push payment out to 90+ days and I end up getting the same amount as if he had paid me within 30 days as agreed. So if UPS charges me $100 to send them an item overnight, but they don't pay me the $5,000 for that item for 3 months, I still have to pay UPS within 7 days.