Follow Payontime on FacebookFollow Payontime on Twitter

Buyers checklist on do's and don't of paying your suppliers

As a director or senior manager, you are best placed to foster a culture of prompt payment within your organisation. These are the actions you can take.

DO

  • Have a top management policy on prompt payment of bills. Ensure that the finance and purchasing departments are all aware of it.
  • Agree terms of payment at the outset.
  • Monitor your payment system regularly
  • To make sure that it processes invoices in time to meet due dates.
  • Instruct that all undisputed bills are paid on due dates.
  • Have a good system for clearing disputes quickly.
  • Foster good relationships with suppliers.
  • Help your suppliers to understand your payment procedures and, if possible, issue guidance literature.
  • Tell suppliers the name of the person responsible for payments.
  • If you have a computerised payment system, make sure it can be overridden if necessary to comply with agreed terms.
  • Promote healthy cash flow in both directions by having efficient collection for your own sales.

 

DO NOT

  • Reduce your bank borrowing with unauthorised free credit taken from suppliers.
  • Use the financial strength of your organisation to impose abnormally extended terms of payment.
  • Rate suppliers for payment in an order which reflects their bargaining power.
  • Use a minor invoice error as an excuse to delay payment when you have had the benefit of a good product or service.
  • Restrict the financing options of your suppliers by including such restrictive clauses as 'ban on assignment'.
  • Condone a hostile payments relationship which does not match the friendly purchasing one.
 
Privacy policyContact us