Getting your suppliers to extend you easier terms of payment is a tricky business — but with the right mindset, you can do it.
Q: I own a small-sized food processing business. I am in a fix! My customers, mostly households, canteens, and other small eateries, mostly insist on credit terms. On the other hand, my suppliers demand that I pay in cash. It's an unfair world, don't you think?! Is it always this unfair for SMEs? How can I persuade my suppliers to give me easier terms?
— RHODA N., Novaliches, Quezon City
A: Do you realize that you are also a supplier to other small businesses — the canteens and restaurants which buy your processed food products? Yet, you are eager enough for more business and understanding enough of their needs to extend credit. You should be able to find your own suppliers who have the same business attitude.
Have you tried to talk openly with your suppliers? Tell them about your business concerns and problems. You may be sorely tempted to threaten suppliers to find another source — but hold it. Threats will get you nowhere.
You are more likely to get concessions if you explained very nicely and reasonably that you would both gain if they supported your business by extending you credit. Point out that with credit, your business is likely to expand and as a consequence, you can buy in bigger volumes. You can also tell them how you, yourself, try to be supportive of your own buyers even though selling on credit is hurting you.
Have you also tried to offer to pay some interest on delayed payments? It may be worthwhile if you're really in a tight bind. After all, credit from suppliers is likely to be cheaper and less complex than borrowing from banks. Agreements can be reached quickly and you don't have to go through a tedious security process nor costly legal documentation.
Source: UP ISSI
Q: I own a small-sized food processing business. I am in a fix! My customers, mostly households, canteens, and other small eateries, mostly insist on credit terms. On the other hand, my suppliers demand that I pay in cash. It's an unfair world, don't you think?! Is it always this unfair for SMEs? How can I persuade my suppliers to give me easier terms?
— RHODA N., Novaliches, Quezon City
A: Do you realize that you are also a supplier to other small businesses — the canteens and restaurants which buy your processed food products? Yet, you are eager enough for more business and understanding enough of their needs to extend credit. You should be able to find your own suppliers who have the same business attitude.
Have you tried to talk openly with your suppliers? Tell them about your business concerns and problems. You may be sorely tempted to threaten suppliers to find another source — but hold it. Threats will get you nowhere.
You are more likely to get concessions if you explained very nicely and reasonably that you would both gain if they supported your business by extending you credit. Point out that with credit, your business is likely to expand and as a consequence, you can buy in bigger volumes. You can also tell them how you, yourself, try to be supportive of your own buyers even though selling on credit is hurting you.
Have you also tried to offer to pay some interest on delayed payments? It may be worthwhile if you're really in a tight bind. After all, credit from suppliers is likely to be cheaper and less complex than borrowing from banks. Agreements can be reached quickly and you don't have to go through a tedious security process nor costly legal documentation.
Source: UP ISSI
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