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At a time when revenues are slowing and the economy remains week, corporations are being forced to squeeze more cash from their day-to-day operations. And where do they get the cash from? From the weak and little ones, says The Wall Street Journal.

According to The Wall Street Journal, it's the biggest and fittest companies that are often taking advantage of their financial might, benefiting at the expense of smaller and weaker ones. "There's a power struggle going on as the credit crunch has moved to Main Street," Sung Won Sohn, a former chief economist at Wells Fargo who now teaches at California State University, Channel Islands told Wall Street Journal. "Big firms can force their terms on suppliers and customers. And if you're a small business or a small store in a mall, you have no bargaining power and have to take what's given, which is not much today."

The Wall Street Journal notes that corporate treasurers and chief financial officers have long tried to reduce cash tied up for day-to-day expenses like payroll and rent. If corporations can manage their inventory well, collect on their bills faster and take a longer time to pay their trade creditors, they can rely less on borrowings and free up cash for other purposes.

Citing some of the power trippers, The Wall Street Journal said that, early this year, Anheuser-Busch Cos., owned by Belgian brewer InBev NV, told suppliers it would take as many as 120 days to pay its bills from 30 days previously. General Electric Co. freed up $3.8 billion in cash last quarter through steps such as shortening cash-collection times, collecting past-due accounts and stretching out payments, a spokeswoman told The Wall Street Journal. Consumer-goods giant Procter & Gamble Co. is also managing its cash flows through speeding up collections from customers.

But all these power playing could have undesirable consequences. The Wall Street Journal warns that if companies force untenable terms on their suppliers, they risk putting vendors out of business, which could end up disrupting their own operations.
 

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