Forming and maintaining a healthy business relationship with a supplier is mutually beneficial. However, there is one way of putting an end to that – late payments!
We wanted to highlight a few reasons why you should always make sure you pay your suppliers on time.
1. It helps form and maintain relationships with suppliers
The greatest method for forming strong business relationship connections is to always pay on time. Suppliers may be experiencing financial difficulties of their own and would appreciate and be eternally grateful for your prompt payment. Your business will gain a reputation as one which operates in a professional, efficient manner, which may benefit the business with other organisations in the future.
Should an essential product suddenly become hard to get a hold of, you are also likely to put yourself higher on the list. A fast payer may be able to negotiate a better price in the future from a position of power, which may lead to more business in the long term.
2. Removes any unnecessary costs
All late invoices are subject to a late payment fee under the late payment statute. As a result, paying your invoices on time will save you money in the long run. As most suppliers deal with unpaid bills, they frequently add a penalty clause in their contracts stating that late payment interest will be levied on the outstanding invoice amount, as well as a separate flat rate for any charges incurred. Additionally, establishing a track record of paying on time repeatedly might provide you with an advantage in negotiations for early payment reductions or better terms in the future.
3. Late payments impact employees
Delaying payment to suppliers leads to low staff morale and high-stress levels. When a company is at fault and payments are late, it is down to the employees to begin damage limitation, which can be stressful due to angry suppliers and pressure from managers within the company. Repeated late payments can compile stress and affect the morale of employees. Less favourable deals mean smaller budgets – anyone involved in finances within the organisation is going to have to adapt to new financial constraints. Again, the additional pressure that all organisations should look to avoid.
4. Avoid supply chain disruptions
Payments to suppliers that are missing or delayed can cause cash flow issues and affect the flow of supplies across the supply chain. Suppliers must obtain funds from someplace to cover their expenses if they are not paid on time, and they must ensure that materials do not leave the warehouse faster than money arrives. Unblocking the late payment bottleneck will aid in preparing ahead of time and keep cash flow moving throughout the supply chain. Furthermore, suppliers will be less willing to share innovations with customers who pay late.
How to avoid late payments to suppliers
By using automated rebate management software, your payments and claims are made without delay, avoiding all the issues listed above. e-bate integrates with your finance system and calculates your payments based on the rules set for any specific rebate deal. You’ll receive all payment approvals so you can sign them off or adjust them before payment.
Payments can also be validated against customer or supplier data, producing an exception report to eliminate queries and bolster your supplier relationships further.