The crisis passed but temporary supplier concessions are about to end
Account for the expiry of temporary supplier payment concessions during post-crisis cash rebuilding.
Corporate Recovery Partners
01 / 06
The better balance has a hidden expiry date
Imagine a business has stabilised after several difficult months. Suppliers temporarily allowed longer payment periods, and the owner now sees more cash in the bank. Two concessions end next month. Before increasing discretionary spending, establish which improvements came from stronger trading and which came from temporary timing arrangements that are about to change.
business.gov.au explains that a cash flow statement helps identify payment cycles and forecast shortages or surpluses. Use the current supplier arrangements and their end dates in that exercise. Do not assume the latest month's pattern continues indefinitely. Have the accountant review how returning to ordinary terms affects the business's ability to meet commitments while rebuilding its cash position.
Collect the written terms and any later correspondence. Record the supplier, affected invoices, expiry or review date and what is expected afterwards. Distinguish a confirmed extension from a request still awaiting a decision. In the hypothetical example, one supplier may resume normal terms only for new invoices while another expects a catch-up payment. Those patterns have different cash effects.
Place the relevant invoices and payments on their actual expected dates. Check for overlapping old and new obligations during the changeover. Avoid simply reducing a generic days-payable assumption if that hides a one-off concentration of payments. Explain uncertainty beside the affected amount so the person using the forecast can see what still needs to be confirmed.
If the transition creates a gap, discuss it with the accountant and appropriate advisers promptly. Contact suppliers through the agreed process if a further arrangement is needed. Do not assume the earlier concession renews automatically or delay payments without discussion. If debts still cannot be met when due, obtain qualified advice on the broader financial position.
Base the recovery plan on the arrangements that will actually apply, with temporary relief clearly labelled. Keep review dates and responsible contacts visible. CRP can help organise the commercial picture. A stronger balance is more useful when the business understands whether it can sustain that position after the concessions that helped it survive have finished.
