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Vendor Pressure The purchasing power of some customers is such that they can exert pressure...

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Accounting

Vendor Pressure

The purchasing power of some customers is such that they can exert pressure on suppliers to go beyond the suppliers' customary allowances. For example, Wal-Mart represents more than 10 percent of annual sales for many suppliers, including Fruit of the Loom, Sunbeam, Rubbermaid, and Coleman. Forbes magazine reports that while many of these suppliers allow a 2 percent discount if bills are paid within 15 days, "Wal-Mart routinely pays its bills closer to 30 days and takes the 2 percent discount anyway on the gross amount of the invoice, not the net amount, which deducts for [trade] discounts and things like freight costs." (Matthew Schifrin, "The Big Squeeze", Forbes, March 11, 1996).

Identify two ways in which Wal-Mart's practice benefits Wal-Mart.

Do you think this practice is unethical, or is it just good cash management on the part of Wal-Mart?

Are the suppliers harmed by it?

What biblical themes can/do apply to this situation?

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