I am Late, I am Late, For a Very Important Date
Alice in Wonderland is a classic story, written in 1865. The Rabbit is very late and is in a hurry, as seen in this short video. Similar to the rabbit, some individuals are chronically late. Others seem to have an internal clock and they just know how long things take and walk in the door at the exact moment, or even a few minutes early. It can be frustrating when two opposites are working together, or living together.
In procurement, you probably have customers that are consistently late paying their invoices, despite the terms. It is clearly stated what ‘on time’ means (30, 60, 90 days and so on). Others are reliable and steady, and you know that the payment arrives exactly as expected. Taking that same approach, how are you to YOUR suppliers? Are you a customer that pays in a timely fashion?
This week’s blog pick is from Procurement Leaders, Stop Paying Suppliers Late And Offer Them Choice. This speaks to offering various options to your customers so there is a benefit to paying early. This incentive (such as 1% 20 net 60) may encourage bills to be paid on a timely basis.
This type of approach helps to build trust. When large organizations pay their small suppliers late, they are taking them for granted. However, since they are a critical component of the process, you want them to remain healthy and interested in doing business with you.
Some companies are very clear what their terms are. Cisco has it defined right on their website. They outline discounts and terms for various geographic regions, depending on economic stability. Princeton University offers six varieties of terms for their suppliers, allowing them to select the one that best suits their situation.
What do you offer for terms for your customers? What have you been offered by your suppliers? Do you take advantage of them and does it make a difference who you do business with?
Share your thoughts by commenting below or tweeting us @BuyersMeetPoint.