Why is managing your suppliers crucial to your business?

What is the main driver of Cash-out of your business? That’s right Expenses.

The objective when managing suppliers payments is to delay payments for as long as you reasonably can without disturbing the relationship with your supplier. Once again, the plan is to collect money from your customers before you need to pay it to your suppliers. Obviously you cannot do this when it comes to salary and wage payments, superannuation or taxation commitments but where possible you should try to defer payment.

If you purchase plant & equipment for use in your business another tip is to match the timing of the payments to the timing of the use of that assets.  That is, organise equipment hire purchase or leasing. This will defer payment of cash out of the business over the life of the asset rather than taking a chunk of cash out of the business in one lump sum.

The first sign of business stress will often be evident in the money that a business owes. It may show in delayed payments to creditors, dishonoured payments by the bank, delay in paying staff superannuation and finally increasing taxation debts. If your business is experiencing any of these early warning signs you should act sooner rather than later.

For more on managing payments to suppliers our specialist Newcastle Bookkeepers have the skills to help you make the most out of your cash and ensure that your bookkeeping problems are solved quickly. For a complete list of bookkeeping services contact Shelley on 0412 481 559.

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