Paying Your Suppliers on Time

It is important to pay any suppliers that have provided goods or services to you on credit within the payment terms agreed. Precious time is wasted by having to take phone calls chasing you for money, paying hurriedly and not recording it properly. You are also at risk of gaining a reputation as a bad payer and will find that suppliers become unwilling to let you pay on credit.

Once you receive an invoice from a supplier, file it according to the payment due date, with the invoice due first at the top. A computerised system will usually allow you to see when your purchase invoices are due.

It’s unlikely that all your suppliers are due to be paid at the end of the month, so it’s a good idea to look through the invoices weekly and pay the ones that are due during the following week all at the same time.

Writing cheques and sending in the post is still a legal form of payment but it’s likely to be phased out in the future. Writing cheques and envelopes takes time and postage is an added expense.

The ideal way to pay your suppliers is to set them up on your internet banking with their bank account details, which only has to be done once, and transfer the amounts due. If their bank account details are not on the invoice, a few minutes getting those details is to your benefit.

Mark the invoices as paid, noting the date and how you paid them, and file the paperwork.

If you find you’re unable to pay a supplier on time, contact them as soon as you realise that, and set up a payment plan. Most suppliers will be willing to receive some of the amount at specified intervals rather than none at all. Make every effort to honour the payment plan.

Summary

Pay all suppliers within their terms of payment whenever possible.

Set up your supplier’s bank details within your internet banking and pay online.

Treat your suppliers as you expect your customers to treat you.

Pointers

  • Pay your suppliers within the terms of your credit agreement wherever possible
  • Internet banking is the best way to pay your suppliers
  • Treat your suppliers as you would expect your customers to treat you
  • File invoices when received according to payment due date
  • Look through invoices weekly and pay the ones that are due the following week
  • If you are unable to pay on time, contact them to set up a payment plan

Apr 16, 2015