In slow economic times, companies often slow down on paying their bills. What’s your feeling about that?
From the beginning of my career, it was drilled into me to pay bills on time, all the time. I’m convinced it’s a winning strategy.
Paying on time encourages the best companies to do business with you.
Paying on time earns you a reputation for professionalism.
Paying on time attracts new opportunities, because of the above.
Of course, paying on time requires prompt collections and/or a solid line of credit.
It’s tempting to string out suppliers when times are tough, but when you do, suppliers remember and it will come back to haunt you when business picks up.
That’s my take anyway.
Right on, Brad.
In my view, paying bills on time is a sign of professionalism, ethics and sound business management.
Prompt payment of bills increases your perceived value as a customer, and will have a positive impact upon the quality of service which your firm receives from suppliers.
On the flip side, from the suppliers’ point of view, it can be worth considering a small discount for prompt or early payment. If this proves a sufficient incentive for a substantial number of customers to pay early, then the cost of such a discount may well be entirely offset and more by reductions in levels of bad debt write offs as well as reductions in labor time and costs associated with following up late payments.
Cheers
Andrew
Andrews last blog post..Socially Responsible Investing part 8: Gambling and tobacco – a form of ethical investing?
Andrew, very true about discounts. Sometimes companies can take it a step further – a generous discount can attract business more effectively than the best sales pitch.
I am usually paying my bills on time. And I feel bad if I pay them one or two days later (which happens about once a year). Online banking makes it a lot easier – you can set a timer for money transfers.
Ulla Hennigs last blog post..The Art of Saying “No!”
Hi Ulla, You have my admiration for using online banking. For some reason it scares me, even though I love using the Web for just about anything.
Brad Shorrs last blog post..Do You Pay Your Bills on Time?
Brad,
there were times when I was afraid to do it. But one of my brothers, who is web-savvy, told me that he was doing it. And then I learned that my bank had better conditions for people who used online banking. I learned also about the safety regulations, and then took my hearts in my hand and jumped. I did not regret it up to now.
Ulla Hennigs last blog post..The Art of Saying “No!”
Hi Brad – I’ve been in situations where I haven’t been able to pay suppliers before. The reason was – bigger companies not paying me. It’s really hard to run a business when folk don’t pay you for 13 months and sometimes not at all – because of some restrictive contract you’re tied into.
And that has a knock on effect. I think most folk don’t try to avoid paying their suppliers deliberately. Often they can’t because they haven’t been paid themselves.
Laws were passed in this country to stop big companies paying more than 3 months late – but they still get away with it.
Cath, I think you’re right that paying bills late is sometimes a necessity. I’m surprised to hear that you’ve legislated bill paying – seems like it would be a hard thing to monitor or enforce, given the different circumstances that come into play. Has the law had any positive effect?
How are you all being affected by the credit crunch/crisis? I’m not in business and my husband and I have always lived below our means, so paying our bills on time has never been a problem. It must be different for businesses.
Jean Browman–Cheerful Monks last blog post..Creating a Sacred Space
Brad,
When I was in the interior landscape business, paying bills on time was always a challenge because collecting from customers was an even bigger challenge. I found that it was easier to collect from small companies because you knew who to talk to. But trying to collect from large companies was difficult. The accounting department blamed it on the department head who hadn’t approved the bill; the department head said he’d sent the approval to accounting but it must have got lost; there was no record of the invoice—send another; the invoice didn’t meet their requirements and had to be resubmitted with specific information on line 3; excuse after excuse after excuse and runaround after runaround.
Jean, In my experience, the great majority of businesses pay promptly, but during slowdowns, marginal customers really struggle.
Lillie, It’s frustrating when large companies give you the runaround, isn’t it? Outstanding collection people often make good sales reps. The one thing harder than selling is collecting.
Brad Shorrs last blog post..Do You Pay Your Bills on Time?