If you want your trading company to do well, you will need to ensure that you consistently pay your suppliers on time. Sometimes (and rather unfortunately), it is easy to get the impression that the suppliers need you more than you need them. This feeling arises out of the fact that you are the one who pays them. And money has a way of making one feel powerful. Yet when you come to think of it carefully, you realize that you need your suppliers just as much as they need you. For if you have no supplies, your business is bound to close shop. Once you come to terms with these realities, the reasons as to why you need to pay your suppliers on time become obvious. And for you to be in a position to pay your suppliers on time, you need to:
- Create reasonable expectations at the outset: how soon can you (realistically) manage to pay your suppliers, after delivery? This is the question you need to ask yourself, before engaging the suppliers. Then, while engaging them, you need to tell them that that is how long they will be waiting for their payments. And that within that time frame, they will be (for sure) getting their money. If, for instance, you tell the suppliers that you will be paying them after a month, and you indeed pay them after a month, they will regard it as a ‘timely’ payment. But if you tell the suppliers that you will be paying them after a week, and you end up paying them after 10 days, they will regard it as a ‘delayed’ payment! So it is important to manage expectations right from the outset.
- Manage your cash-flow properly: the idea here is to ensure that you always have enough money (from your sales revenues and so on) to pay the suppliers on time, consistently.
- If necessary, borrow to pay the suppliers: you can take a bank overdraft, or a short-term loan to pay the suppliers. You can even use your own private funds — just to ensure that you pay your suppliers on time. Like if, for instance, you also work at a company like PepsiCo (on top of running the trading company) you can use part of your paycheck to pay the suppliers. So you just visit the Mypepsico website, to check the said paycheck. That is essentially a question of proceeding to the Mypepsico login page, signing in, and checking if your paycheck has been credited to your direct deposit account. You then use the money to pay the suppliers. And then you use the money you get from the sale of the merchandise you paid for to reimburse yourself.