Where have you been renting that didn't insist on payment up front?

Everywhere I've seen you've payed that months rent by the ~5th of that month or they come after you for interest.

Almost like I acknowledged the specific analogy wasn’t great because rent is typically pre-paid.

Fine, let’s talk post paid. Electric bills. How you would you feel about an electric company that sent you an invoice and wanted to be paid daily? Yes, yes, the analogy is also imperfect because consumer electric companies can do auto-pay and walmart generally does not for small vendors. But please try to see the point even with a less than totally perfect analogy to consumer life.

> How you would you feel about an electric company that sent you an invoice and wanted to be paid daily

This would be trivial via Direct Debit.

Maybe your anologies just don't work, because the situation is completely different? The payment terms spoken about above are not to minimize transaction fees, often enough they are 90 days after the order is completed even for a single order, how does that minimize transaction cost (and how is that comparable to electricity bills?)?

I know that in Australia the terms in groceries are horrendous. Generally, frood vege suppliers have to buy specific boxes for delivery (from the supermarket chain) they then still have to pay rent on those boxes and if items don't sell they have to take them back (and pay a box use fee again), make items available at discount for specials run by the supermarket, on top of that the payment terms are as described above. Essentially the big chains don't take any risk, and the small suppliers all the risk. This might be particularly bad because the market is dominated by 2 chains. Supposedly Aldi and Lidl were much better at the time, because they tried to break into the market.

I would expect the electric company to work like EZPass does where you're expected to maintain a non-negative account balance that they pull money from when you go through a toll and you either periodically top it off by stopping in and paying cash or letting them do so automatically (via direct deposit / CC).

This situations where paying in advanced _every_ time would be cumbersome just means the customer has to maintain a balance. There is also a difference between a business and residence.

It can vary by landlord and jurisdiction. Some places you’re technically paying for the month you just finished, others you’re paying for the month upcoming. It only really differs on the accounting after the first month.

Interesting - in India, I have only paid house rent at the end of the month (post-paid). It was a shock to me to learn that in UAE they expected rent annually, in "advance" (I guess it is smart as that weeds out those living paycheck-to-paycheck, who may default on rent)!

I liked the example, it illustrates it from a different perspective. However, why not paying daily? Hourly? Minutely? In the age of computers...

Even in the age of computers each transaction has a cost and a risk associated. And there is no upside to large companies. They don’t want to receive per-minute payments any more than they want to send them. So if 95% of a business’ volume works one why, why invest in making 5% different just to deal with smaller vendors, who are already more difficult to deal with (for 100% good reasons).

AWS bills in seconds in some cases but still invoices monthly.

Right? Even cloud computing companies which technically charge you per-minute pricing end up rolling it into a single monthly bill at the end of the month instead of a CC transaction literally every minute.

In the repo market (overnight inter-bank lending) Fedwire daylight overdraft interest accrues every 15 minutes.

By my reading of the story, upfront payment wouldn't have changed the number of payments.

And forget about daily. It's very reasonable to want monthly pay, and should not be a burden at all. And monthly pay would need at most a month of float, on average probably less. That's not where the real payment issues are.

Yeah frequency of payments was an example, but kind of a red herring. Consider it as “running AP differently for a small subset of vendors” as an abstract concept. It’s expensive to do 5% of your business differently than 95%.

I believe the idea is that no vendors should get treated that way.