Paying Promptly Matters

But always late causes problems. If another business is always paying late, they are effectively using your business, and others probably, as their unofficial banker.

But paying late is an own goal in so many ways. Let’s explore this and look at what paying promptly can positively achieve for every business.

Great suppliers don’t grow on trees

Your great service is directly linked to your supply chain’s ability to deliver to you. Paying them promptly is your signal that you value them. That can be repaid to you in many different ways. They may:

• Prioritise your orders when timescales are tight,
• Flag problems early,
• Extend better terms,
• Bring you opportunities before they go to someone else.
• Cut you some slack when cash flow is tight,
• Give you more favourable prices.

Trust and support are built, not expected

The above list is a fantastic wish list of things everyone needs in business. That is because they all strengthen your competitive advantage. In the long term, competitive advantage is one of the key ingredients that ensures that your business will thrive.

Have a prompt payment culture

There have been many initiatives over the last 20 years or so to encourage businesses to pay promptly. Many centre around a ‘code’ or ‘policy’. What it boils down to is having a top to bottom commitment to prompt payment as your business culture. Here’s some sage advice that has been dispensed on the subject over the years:

• Have a top management policy on prompt payment of bills.
• Ensure that all staff are aware of it, especially but not only those in finance and purchasing.
  
• Agree terms of payment at the start of all contracts.
  
• Monitor your payment system regularly for timely payment of invoices.
  
• Have a good system for clearing disputes quickly.
  
• Foster good relationships with suppliers by informing them of your payment procedures and who is responsible.
  
• Meet your suppliers and engage with them through your shared business goals. Create a common purpose.

Break the chain

You may be under pressure to pay late because you are being paid late. This game of payment ‘pass the parcel’ is hard to step away from. But that is where we may be able to help you by making money available to you sooner, using your outstanding invoices.Talk to us to see how we can help.