The May 2010 Supply Chain Index (SCI) report, distributed by Cortea, dropped to 6.83 days beyond terms (DBT), its lowest level since April 2008. The index trend continues several months of consecutive improvement.
This May 2010 SCI represents the first time since the index was created in April 2007 that the average DBT for supply chain stakeholders has been below 7 days for two consecutive months.
"After a long period of insecurity, businesses are returning to a healthier cash flow cycle. The combination of companies restocking their inventories while also making timelier payments to their suppliers signals an important shift in both financial stability and mindset," said Jim Swift, CEO of Cortera, a community-driven business credit bureau.
"Carefully balancing working capital was critical to weathering the economic storm, but now businesses appear to not only be more confident, but also, perhaps have improved their ability to pay," Swift explained.
The Cortera SCI tracks late payments against agreed upon terms, measuring late accounts receivable, excessively late accounts receivable, and overall average days beyond terms (Average DBT).