| dc.description.abstract | Apart from health impacts, the coronavirus pandemic brought many economic challenges for mi- cro and small enterprises (MSEs), especially in Latin America, where they account for most of the firms. For these cash-constrained companies, the combination of lower sales, higher costs of supplies, and ad- vanced payment consumes cash and diminishes their chances of businesses continuity. We approached the problem of how to increase MSEs’ chances of survival from a supplier relationship management and customer relationship management standpoint. Our goal was to determine the most effective time to pay suppliers and collect from customers, and what types of relationships could achieve those times. We mod- eled the cash flow between supply chain echelons to evaluate different payment-term configurations and identify trade-offs and optimization opportunities. We found that via collaboration with vendors and cus- tomers the times to collect cash can be modified in MSEs’ favor. Increased time to pay suppliers frees up cash, which MSEs can reinvest to purchase more materials and grow sales. When accompanied by an in- crease in sales beyond a breakeven point, the payment time increase supports a win-win situation: suppli- ers see a net-zero or net-positive impact, and MSEs can expect value creation of up to 17% from working capital reduction and profit growth. Therefore, the adoption of collaborative relationships with suppliers and customers may increase the likelihood of business continuity—not only during times of crisis but also in periods of relative normality. | en_US |
