Perhaps, one of the biggest things that can help you and your relationship with your suppliers is to be consistent in your payment. You might not be able to pay everybody right on time. But if you can establish a regular pattern of making your payments, such as getting payments in 40 days or 45 days as opposed to 30 day terms, that can still be much appreciated.

The accounts payable department on the other end will know when to expect your money. They’ll know their better off putting efforts elsewhere with other customers. They won’t bother you after 35 days or so.

What doesn’t work is being erratic. If sometimes you pay right on 30 and other times it’s going to be on 60, you’re going to condition certain behavior. You’re going to condition them to feel like they need to call you that they need to keep on you in order to get payment done in the shorter timeframe.

By being consistent and having your payments scheduled out on a consistent basis, it can also help you be more predictable in your payments across all your suppliers. If you try to pay everyone right on 30 days, but then slow down if you’re collections slow down a week, it’s going to be erratic across the board. By putting a little bit of buffer in there in terms of when you pay but being consistent at it, you give yourself some breathing room to smooth out the slight bumps that might occur in your cash flow.

So figure out what you could handle and do on a consistent basis with your suppliers and put that in place. You’ll be on track to having better supplier relationships.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
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