According to a CFO.com survey released on Wednesday, “”[as a result of the credit crisis] 61 percent of finance chiefs are concerned about their companies’ access to day-to-day financing.” This concern is especially acute for small to mid-sized suppliers for whom short-term credit is the primary operational bridge allowing them to make it from materials purchase and production until payment of the invoice. For these suppliers, the statement made by Alex Young of Standard and Poor’s to Bloomberg rings ominously true, “if businesses don’t have access to capital, smaller companies in particular, they might get wiped out.”

Not to pile on the bad news, but yesterday the AFP (Association of Finance Professionals) stated, “short-term credit markets have effectively seized up in recent weeks, causing companies to hoard cash and take defensive actions, including …delaying payments to their suppliers.”

Unfortunately, such short-sighted actions by buyers may have long term implications to suppliers in the midst of a short-term credit crunch. Because a unique characteristic of the current credit crisis is that small and mid-size suppliers who are otherwise very healthy, fiscally responsible and profitable are at risk due simply to cash flow issues, not their underlying business models.

While the evidence is just beginning to roll in regarding the impact this is having on suppliers and supply chains, the anecdotes are compelling.

David Richard, owner of a web-design firm explains his company’s situation this way, “we have to pay our employees every month, and invoices usually have a 45- to 60-day cycle, so during that time we have to fill in the blanks.”

And as another owner of an otherwise healthy business explains, “our company is showing a reasonable profit this year to date. The biggest challenge we are facing is our accounts receivable. If our customers do not submit payments on time, we find it hard to pay our vendors and our staff. If the credit crunch closes down our credit options, we would be in jeopardy - because of a cash-flow issue, not a profitability issue.”

There are many aspects of the credit crisis for which Buyers need to have a plan. Not the least of which is their supplier’s elevated cash flow risks, and thus their ability to support a buyers ongoing operations. More than ever, Buyer/Supplier fortunes are tied together, and the risks to a supplier’s cash flow are direct risks to buyers supply chains.

Now is not the time to delay payments to suppliers…that just exacerbates their cash flow issues. Rather, I believe smart businesses should take a longer-term approach to their supplier’s short term cash flow needs. The opportunity is ripe for buyers and suppliers to leverage network technology that enables them to collaborate over early payment opportunities such as discounting and third party financing (where capital is still available…more on that later), and thus create a win-win scenario where both organizations can benefit.

The credit crunch can’t last forever (hopefully!), but for the moment the risks to your supply chain is real. Why not use the opportunity to find payment options that minimize risk, cut your costs and increase your supplier’s liquidity.

Drew Hofler is the Senior Manager responsible for Ariba’s Financial Solutions suite of products. In addition to extensive experience in banking and financial services, Drew is ACH Accredited and held Series 7 & 63 NASD certifications.