WACC Weighted Average Cost of Capital — the blended interest rate a company pays to borrow money, like a mortgage rate for a business. If your WACC is 7% and a supplier's is 14%, paying them late is like charging them double.
DPO Days Payable Outstanding — how many days on average you take to pay suppliers. Higher DPO can look like "free cash" but often hides costs that hit later.
Working Capital Cash available to run daily operations — what you need to pay bills, buy inventory, and keep the lights on. Stretching it by delaying supplier payments is borrowing from your supply base.
Cost of Capital What it costs to borrow money — like the interest rate on a loan, but for the whole company. When a supplier's borrowing cost is higher than yours, making them wait destroys value for both sides.
Dynamic Discounting A sliding scale of early payment discounts — like a cashback card that pays more the quicker you settle. Pay immediately → 3% off. Pay in 30 days → 2% off. The faster you pay, the more you save.
Reverse Factoring A bank pays your supplier early using your credit rating, then you pay the bank later. Can hide debt if not reported properly — collapsed firms like Carillion and Greensill proved how dangerous this can be.
