Paying suppliers on time is good for your business

As a buyer, you must create and grow good relationships with suppliers because they are an important component of your business. That is why some large firms, which buy huge volumes of items from different suppliers, issue guidance literature on payment procedures. This helps suppliers to understand the timing of payment procedures, how best to present invoices and how to follow up unpaid items and disputes.
A truck crosses into Rwanda from Uganda at Gatuna. The New Times / File.
A truck crosses into Rwanda from Uganda at Gatuna. The New Times / File.

As a buyer, you must create and grow good relationships with suppliers because they are an important component of your business. That is why some large firms, which buy huge volumes of items from different suppliers, issue guidance literature on payment procedures. This helps suppliers to understand the timing of payment procedures, how best to present invoices and how to follow up unpaid items and disputes.

Bella Rukwavu, the Agaseke Women’s project co-ordinator at Kigali City Council, believes that even if one’s company does not go to such lengths to foster good relationships, it should try to ensure that its staff operates reliable payment procedures.

“Do you have clear, instructions on payment of bills? Are all finance and purchasing staff aware of them? Do buying and payments functions work together to provide quality service? Is the payment policy being monitored to ensure that it works?” These are some of the questions procurement officers should ask themselves while paying suppliers, Rukwavu adds.

She says sellers normally specify conditions of sale. In practice, however, the power of a large buyer often means that he can impose his own terms.

Buyers should, however, ensure that any variations to the seller’s standard terms are agreed on by both parties. An example is the condition of sale relating to the allowed period of payment.

“When an order is placed for specific goods or services, at an agreed price payable on the agreed date, all those aspects are legally binding,” Rukwavu says.

She emphasises that any contractual term is only valid if it is agreed at the order stage. Consider the opportunities for negotiation before the contract is made.

In any case, a supplier may state standard credit terms. This could, for example, be 30 days from date of issue of invoice.

So, next time you source a supplier, ensure timely payment for services rendered, and always be on good terms with them.

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