Don’t squeeze your suppliers.....

If you have a business where you are selling goods then suppliers are vital to your business. However when cash is tight it is usual that the last people to get paid are your suppliers.

The trouble with this is that in the short term you could be resolving a cash issue but in the long term it can do more harm than good. The flow of goods for you to sell into your business are critical. To achieve this you need your suppliers to work well with you.

The keys to good supplier relationships are

·Get closer to them – communicate, tell them what your plans are and what your situation is to avoid any interruption in the flow of goods

·Have a policy – and stick to it!! If you say you are going to pay someone then do it. You could arrange a payment plan for old debt or set up a direct debit with a supplier in return for extra discount....

·Determine your strategy – this will involve looking at how much stock you hold, when it is delivered, work out who your suppliers should be (consolidate where necessary)

·Outsourcing – get the supplier to do more. For instance you could get the supplier reduce their delivery times, which will allow you to lower your stock levels and improve your cash flow.

Don’t forget that suppliers want and need your business – but they will stop supplying if payments become irregular or late without notification. Negotiating with them is an excellent way of managing your cash-flow and driving your costs down.

If you want to review the way you manage your suppliers then please call Richard Dare on 01202 875900.

To find out more about any of these stories or
Ward Goodman please contact 01202 875900