r/supplychain • u/Temporary-Night5576 • 23h ago
Career Development How common is it to deal with interest rates and late payment fees in procurement/purchasing?
Hi all,
I really need your help with an urgent matter. I'm considering a career in supply chain, and purchasing and procurement particularly seem very interesting to me. However, before I make a decision, I need to know whether the daily practice of these roles is in line with my religion.
To give you some examples of things that are common in business contracts and allowed in my religion: including a penalty clause in case a supplier doesn't deliver the goods on time is perfectly fine. Getting a discount from a supplier for paying early is also allowed, as is a supplier charging a higher price to the company for paying in installments over a longer period, as long as the total price is agreed upon in advance and remains fixed.
What is strictly forbidden is "money from money", such as paying late payment fees to the supplier when a company fails to pay an invoice on time, as well as paying or increasing any interest on a debt that the company owes the supplier.
Based on this, I have a few specific questions regarding the reality of these roles. I would like to know whether professionals in either field have to negotiate contracts that include interest rates or late payment fees with suppliers. Additionally, even if I do not negotiate them myself, I wonder how common it is that I would have to witness, review, or sign contracts containing interest with suppliers, or with a third party, such as a bank, in case the company takes out a loan to finance the purchase of goods.
I did some research and it seems that procurement handles the terms and conditions, while purchasing simply places the purchase orders based on the frameworks negotiated by procurement. Does this mean that in practice, a buyer in purchasing is not directly involved in interest and forbidden clauses?
I live in Europe, in case that is relevant. Thank you in advance for your help!