When cash is tight, it may become a challenge to remain current on those accounts payable. We’ve all been there, and there will always be times when delaying payments becomes inevitable.
Slipping for a few days every now and then is okay and won’t be held against you. But stalling payments repeatedly and deliberately is not good business practice. Here are five compelling arguments as to why you should go out of your way to keep your vendors happy.
1. You’ll get VIP treatment
Your vendor will systematically serve those clients first that pay their bills reasonably on time. You definitely don’t want to end up being rated as a class B, C, or D customer – and be served accordingly.
2. You’ll get better prices
Being the valued customer that you are because vendors are able to depend on the timeliness of your payments, they will be more willing to give you better prices. You are after all a keeper, and it’ll pay off for them to keep you happy.
3. Go for a prompt-payment discount
Once your vendors realize that you honor your obligations and pay their bills on time month after month, they’ll probably be willing to give you a prompt-payment discount. You can make another 2-3% at the bottom line, and they know they’ll get their payments within seven days from invoice dates now because even without the discount you’re paying promptly in 30 days.
4. Your payables won’t pile up
Once a serious contract is landed and you receive large chunks of payments, the money won’t disappear over night. This typically happens when there’s a considerable backlog of payables, and it’s quite disturbing to see that large payment you just received virtually disappearing over night.
5. You’ll effectively support SMEs
If you’re a large corporation or even a small one, you’ll effectively support another SME by keeping their cash flow strong and healthy. SMEs are typically tight on cash, and delaying their payments can cause serious damage to their operations. So be a good corporate citizen and pay them in time so they can pay their bills and payroll on time as well.
Ultimately it will all come around; if you’re late in paying X, they will be late in paying Y, who in turn will be late in paying Z, and who will finally be late in paying you. You probably won’t be able to change the world, but you can play your part in fostering a better business environment for all.
About the Author
Pinnacle Business & Marketing Consulting is a results-driven boutique consulting firm that specializes in providing clients with practical and pragmatic solutions to their business and marketing challenges.
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