Six steps to managing cash flow: Maintain good terms with suppliers

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Suppliers are an important part of your business. In addition to providing services and goods for your company, they also offer information and credit when required. Without a reliable supplier, you may find it difficult to build a solid, profitable company.

Communication

Maintain contact with suppliers to become familiar with goods and services they have to offer. Getting to know a supplier will make it easier to gauge whether or not you can rely on them for prompt delivery at short notice, or to source unusual items for you. If you build up a good reputation with the supplier, with prompt payment, you may find that they are more tolerant if you do hit a few problems with cash flow. You may also be offered a discount for prompt payment from a regular supplier.

Orders

Try to set up a regular order where possible, keeping last-minute orders to a minimum. If you stay in control of your orders, you will make life much easier for your supplier, who will appreciate the extra notice given for supplies. Last-minute orders on a regular basis could cause an unnecessary strain on the relationship.

Finances

In addition to building a solid foundation with your suppliers, you must also be aware of any financial difficulties your supplier has, as this could affect you. If you have concerns, address the supplier in an open and honest manner, so that you can be reassured your goods or services will be delivered.

Review suppliers

Review the situation with suppliers on a regular basis to make sure you are getting the best value possible. If you outsource accounting, your accountant will probably advise you of any problems. Be prepared for your supplier to review the situation too, as they may need to increase prices or may even have an offer for you.

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