Managing Suppliers and Supplier Payments

Managing suppliers and making payments on time is one of those behind-the-scenes tasks that suddenly become important when you run a business. Most of us have some experience of budgeting to make sure we pay our bills on time anyway. We’re almost certainly not alone in shopping around for a better deal when our car insurance renewal quote arrives.

But in a business this sort of supplier management can be a huge part of its efficiency. From picking the right suppliers to work with to staying on top of payments, it’s all about building strong relationships, staying organised, and keeping things moving like a well-oiled machine.

In this article, we’ll look at why managing suppliers and their payments is so important, and how businesses can do it effectively to ensure long-term success.

Why is it important to keep track of suppliers?

Keeping track of suppliers is a game-changer no matter how big or small your business is.

Know when to expect deliveries

Imagine running a restaurant but not knowing when your food suppliers are next delivering or what sort of standard you can expect. That would be chaotic. And probably rather stressful.

Having a close eye on suppliers ensures you know exactly when, what and how supplies will arrive, so you can keep everything flowing.

This way, you also avoid nasty surprises like running out of essential items or having to scramble around trying to meet last-minute customer demand.

It’s all part of stock and inventory management processes, which we’ll casually mention in the banner below.

Manage supplier costs

Closely managing suppliers is a good way to stop costs spiralling out of control. When you track things like pricing, order histories and delivery times, you get a useful picture of each supplier’s reliability and how cost-effective they really are. It opens up opportunities to negotiate better deals, ask for bulk discounts, or maybe even find alternative suppliers if someone’s prices are creeping up too high.

After all, staying on top of supplier costs can make a big difference, especially in competitive markets where every penny counts. In other words, it isn’t just about having enough stock; it’s also a key part of managing your budget and keeping your margins healthy. If you find negotiating over price makes you feel anxious, at least this way you’ll have data to back you up.

Protecting your supply chain

Supplier tracking also plays a big role in managing risks. Sometimes things can happen outside anyone’s control – think transportation issues, natural disasters, or even sudden changes in regulations. By monitoring your suppliers closely, you can spot potential risks early and have a backup plan ready if one supplier faces issues.

Finally, keeping tabs on your suppliers is also about building strong relationships. When you take on board things like their communication and performance, you can work more collaboratively with them. Suppliers tend to appreciate knowing they’re valued and often go above and beyond for businesses that treat them as partners rather than just providers.

These relationships can lead to perks like priority service, flexibility in urgent situations or even early access to new products. Essentially, tracking suppliers is really a way of nurturing partnerships that can help your business grow and stand out. In other words, supply chain management isn’t just about making sure you have enough stock!

How do I know if a supplier is the best one for my business?

To know if a supplier is the best fit for your business, look for a balance of reliability, value and quality. They should consistently deliver on time, offer products or services that meet your standards and provide good customer support when needed.

Check their reputation – reviews or references from other businesses can give you the lowdown. Pricing is important too of course, but don’t just go for the cheapest option; make sure you’re getting quality that matches the cost. The best supplier is the one who makes your life easier and helps your business run smoothly at the same time.

How should businesses track suppliers?

It’s entirely up to you! Some businesses track suppliers using specialist supplier management systems or software. These tools help keep all the important details in one place – like contact information, delivery schedules, order histories and performance reviews.

They can even send reminders for upcoming orders or flag any issues, so you’re always on top of things. If you’re not quite ready to invest in software yet, simple spreadsheets can still do the trick, as long as you’re consistent about updating them! Some accounting software (ahem) includes supplier management tools as well.

The key thing to remember is regular communication. It’s not just about numbers, it’s about building a relationship.

Having scheduled check-ins or just keeping in touch for feedback on how things are going can really help maintain a strong partnership. So whether you’re using some kind of software or just good old-fashioned spreadsheets, staying organised and keeping the lines of communication open is the best way forward.

What is a good way to manage supplier payments?

A really good way to manage supplier payments is by setting up a clear payment schedule from the get-go. This means having a system in place to track due dates and making sure you’re aware of any discounts for early payments or penalties for late ones.

We go on about cash flow quite a bit, but it’s one of the golden rules of running a business so we won’t stop. Try to monitor as far in advance as possible what payments you have going out and when (and where possible, coming back in). It will help you make sure you have enough funds available to pay your bills.

What if I can’t pay on time?

If you’re having any cash flow issues or need a bit more time, being transparent and upfront can go a long way in keeping things amicable. Most suppliers will appreciate the honesty and might even offer flexible terms to help you out.

At the end of the day, managing payments effectively is all about staying organised, keeping track of deadlines and maintaining strong relationships so that both sides are happy! You can only do your best.

Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.