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.