Last spring, when the coronavirus pandemic hit the U.S. economy, many companies asked their suppliers for more time to pay their bills. A year later, some of them are holding on to the better terms, freeing up extra cash.
Big U.S. companies on average took 58 days to pay suppliers in their first quarters of fiscal 2021, up 5.5% from 55 days in the comparable period last year, according to research fromThe business advisory firm gathered the data from corporate disclosures for 938 of the largest public U.S. companies by revenue that have reported results for their fiscal first quarter, excluding financial institutions.
For fiscal 2020, businesses took 62 days on average to settle their dues with suppliers, up 7.6% from the previous year, Hackett said. The full-year data set includes 1,000 companies.to free up cash for running their businesses, or working capital. The pandemic has made cash an even bigger focus for chief financial officers. Companies had average cash balances of $1.4 billion during their fiscal first quarters, up 14% from a year earlier, Hackett said.
“Term extensions have not gone away,” said Craig Bailey, an associate principal at Hackett Group. Companies, particularly in industries hit hard by the pandemic such as retail, remain as changes to consumer spending patterns during the pandemic have made forecasting demand more difficult, Mr. Bailey said.has benefited from longer payment terms with its suppliers, Chief Financial Officer Adrian Mitchell said on a May 18 earnings call. It took the company 163 days on average to settle its bills during the first quarter, up from 134 days a year earlier, according to Hackett. The company in its latest quarter had about $1.