, Columnist
Big Companies Don't Pay Their Bills on Time
Delaying payments to suppliers has become downright fashionable.
Pay up.
Photographer: Martin Divisek/BloombergThis article is for subscribers only.
One of the more interesting business phenomena of the past decade has been the flow of cash in and out of Amazon.com. A metric called the cash conversion cycle measures the lag between when companies have to pay their suppliers and when they get paid by their customers. At department store chain Macy’s, it’s 71 days. At the legendarily efficient Wal-Mart, 12 days. At Costco, with its limited inventory and super-fast turnover, it’s just four days.
At Amazon, the cash conversion cycle was negative 24 days in 2014. That is, on average the company took in cash from customers 24 days before it paid it out to suppliers. By Amazon’s historical standards, that wasn’t even all that impressive: