One of the best ways you have available to you to improve your cash flow is to renegotiate your vendor terms. Improved vendor terms allow for additional lead time between payments to purveyors, and provide relief when your bi-weekly payrolls, monthly rent, insurances and sales tax payments are due.

It’s common practice for vendors to set-up new customer accounts at C.O.D. (cash on delivery) or net 7-day terms. It’s understandable that, as you would like to prolong your vendor terms to relieve your cash flow problems, your vendors want to get their cash as soon as possible to maintain their own cash flow. However, this doesn’t mean that negotiating your vendor terms with your purveyors is completely off the table. If you have shown good faith by meeting your current payment terms for a few months, you are in good standing to call your vendors and ask for your terms to be extended. Ideally, you want to continue renegotiating with your vendors until 21 or 30-day terms are granted.

Here are some of the other reasons why extended vendor terms are beneficial to your business:
• streamline your accounts payable processes;
• better handling of credits for returned products;
• better management of your surplus inventory and cost;
• significantly reduce restaurant management time spent dealing with deliveries and C.O.D. payments.

Every bit helps when it comes to finding ways to improve your cash flow. An extra seven days to pay your purveyors can have more impact that you know to free up your cash. Revisit your vendor terms today and you won’t be disappointed.

For more information on vendor terms, please contact us.