Good Business Is a Partnership
When working in business, it is sometimes too easy to focus entirely on customer and shareholder needs and prioritise them over any other stakeholders in the enterprise. But, truth be told, if your business is going to thrive in the long run, you need to have excellent relationships with your employees, sub-contractors and suppliers too.
While an authoritarian business leader might think that this second set of people is infinitely replaceable, a wise business leader understands the importance of maintaining an overall balance. High staff turnover is not good for any organisation. Retaining people and letting them know they are valued is a much better way to increase productivity.
Put Yourself in Your Customer’s Shoes
Putting yourself in your customer’s shoes makes it easy to see how we all want to be treated. There is an old maxim that the customer is king. We are all customers somewhere, and we all want to feel we are getting the best possible treatment. So if we place an order, we want the goods as quickly as possible. Good communications mean that customer trust is built up, and they will likely leave good reviews and return when they want to order more.
Good Practice – an Example
An example of good practice in this area is the online gambling industry. Millions of people every week enjoy buying lottery tickets, having a punt on the football or horses, or trying out their chances on the fruit machines. It is essential that these people feel that they are playing in a safe and regulated environment. One of the ways in which the operators can ensure that people have a warm glow around their experience is to make sure people can access their funds rapidly. This is why popular fast withdrawal casinos are highly rated by their customers and industry reviewers alike. There is no messing around, no waiting days to get your cash.
Fast Payment of Invoices
The same applies to companies that supply goods and services to your business. When they put their invoice in, they need to know when they will be paid. Sometimes there is a good reason for offering very delayed payment terms. If this is the case, you need to be upfront with your suppliers and sub-contractors; otherwise, they may become jittery if it takes a long time to be paid. You may find that they are unwilling to take on further work until the invoices are settled, which could lead to supply chain problems for your business. Essentially it is about managing expectations. Suppliers will feel more comfortable if they know what payment terms have been agreed upon.
Building Good Supplier Relations
Paying your suppliers quickly is just one element of building good relations with them. Having strong supplier relationships can be highly beneficial to your business.
Impact on Your Business
While cash flow issues can lead to late payment of suppliers, you should also consider the impact this can have on your business. It is possible that it could lead to reputational damage to your business. Suppliers might compete for your business, but they will also quickly pick up on rumours. This, in turn, could lead to strained relationships with them if they constantly have to chase for payment.
If a supplier is not being paid promptly, they may have problems managing their cash flow, leading to less favourable terms in the future. Suppliers may add costly late-payment clauses on future invoices or even sue for compensation. Not paying promptly can indicate that your business is facing financial difficulty, which can become a vicious circle.
To promote good payment practice, you should agree on terms at the outset, pay undisputed bills on or before their due date, and make sure that you agree to a system for resolving any payment disputes. Keep an eye on the suppliers’ invoices to ensure they do not get stuck in the accounts department.