You want to exceed customer expectations with credit terms, but you also need to keep on the good side of suppliers to ensure the best deals and maintain healthy relationships. However, to balance both means you need a healthy cash flow. The only way to ensure you have good cash flow is by having a fantastic working capital cycle.
So, what can your business do to improve supplier payment terms and supplier credit terms to create a happy supply chain and a better working capital cycle?
1. Manage your inventory
It is vital to ensure you have products ready to go when it comes to sale but overstocking your inventory means that you are paying for the space and unsold goods. Instead, keep your stock lean and try not to over order so that items are not left on warehouse shelves. Furthermore, by buying less in, you have less to pay your suppliers.
2. Resolves disputes quickly
Disputes take up valuable time and cost that businesses do not have. Furthermore, conflicts that drag on can even result in legal cases which can be astronomically expensive especially for small businesses. By resolving disputes quickly, whether between customers or suppliers, you reduce the cost that could incur through delays. It is often best to put a course of action in place quickly, allowing everybody to move on.
3. Streamline expenses
It is always good to review your business costs and work out where any unnecessary expense is going. It may be worthwhile reviewing prices with suppliers or switching suppliers if you notice a better deal. Similarly, it may be more cost effective to buy a product or service outright instead of through a rental or service agreement or vice versa.
4. Check for discounts
Suppliers may offer discounts for quick repayment which can save your business a significant
amount of money. You may think that with the state of your cash flow you are not in a position to do that. However, by using Supplier Finance, your provider can pay your suppliers instantly, and you can pay back the provider when your clients pay you. This way you don’t have to renegotiate supplier payment terms or supplier credit terms.
5. Outsource accounts receivable
It can be costly to chase up clients and invoices to make sure you receive payment. Furthermore, it can take a huge amount of time which could be better spent growing your business with profit making activities. Fortunately, outsourcing can be really easy and flexible.
Global Asset Finance Limited offers Selective Invoice Finance, Invoice Factoring, Invoice Discounting, Invoice Finance, Export Finance, Export Factoring.
This releases funds from your debtors as soon as you invoice. Once the debtor pays, you can receive the rest of the payment minus a small management fee and improves your cashflow.
6. Clear loans
If it is possible, then try to clear loans that have a high interest rate that is costing you more through future instalments and interest. If you cannot clear these high interest loans, look to transfer to loan to a fixed rate so you know what to expect each month which can help to stabilise your cash flow. Does your working capital cycle need a boost?
If your working capital needs a boost, Flexible Invoice Discounting along with other forms of Invoice Finance can help your business.
If you want to release funds from the money you are owed before the supplier payment terms.
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