Pay Early, And Five Other Ways To Make Your Suppliers Love You
4 min. read
Jun 9, 2020
When you get an emergency call from a customer who needs something right away do you jump to it? Let me add a little twist: let’s suppose that the customer is kind of high maintenance. You know the kind: one who’s difficult, who complains, who nickels and dimes, who isn’t loyal…or isn’t even very nice.¬† So now what would you do?
You’d probably do what I do: if you can meet the requirements then‚ sure, you’ll take the order. But if it’s going to cause disruption in your business or cause problems with other, better customers in the queue you’ll probably say sorry pal.
You wouldn’t be in the wrong either. In the end we do business with people, not companies and we do business with people that we enjoy working with. Sure, profits are important. But so are relationships.¬† Like me, you’re probably happy to bend over backwards for a really good customer. Which is exactly why you should always be a really good customer to your suppliers, particularly your larger suppliers.
How? By doing these six things.
1 – Pay them all with credit cards.
It doesn’t matter if your supplier accepts credit cards. You can get set up on a service like Plastiq and arrange to use your credit card for all transactions. The supplier will receive payment any way they choose (i.e. check, transfer) and you’ll have plenty of opportunities to make up the fees by doing some of the things below. This way your supplier gets paid timely and with ease, which is always the number one thing that must happen in a good supplier-customer relationship.
2 – Do not use your suppliers for financing.
For years I’ve been irked when experts say that instead of relying on banks or lenders for financing, just extend terms with your vendors because it’s “free.” Well, no it’s not. Case in point: how do you feel when a customer extends their payment terms with you? Are you happy about that? Does that motivate you to do a great job for your customer and to be there every time when needed? You would be more predisposed towards doing so if your customer is always prompt and consistent about paying. Otherwise, you have less incentive. Well, the same goes for your vendors and suppliers. Don’t monkey with their payments. That’s what banks are for.
3 – Pay your suppliers early.
If you use credit cards and a service like Plastiq you can pay your suppliers early. They really like that. In fact, I would say that most companies would jump at the chance to better serve their customers who actually pay their bills early. Many suppliers offer discounts for early payment. Others that don’t may be happy to, if only for the benefit of getting the cash in the bank. A one or two percent discount would almost cover any fees you pay for Plastiq, and forge a better relationship with your supplier.
4 – Give your supplier a fair chance to compete.
If a supplier is charging you too much, then tell them so. If you find a competing supplier with a cheaper price, don’t just give up and ghost, particularly if your original supplier has been working with you for a long time. Again, how would that make you feel if a customer just disappeared without even giving you a chance to compete? Oh, that’s happened to you already? See how it feels? People are going to charge as much as they can – it’s human nature and perfectly acceptable in business. So don’t let your emotions get in the way. For a good supplier that delivers quality product on time it benefits both you and the supplier to share data and give that supplier a fair chance to compete for your business before losing it to a competitor.
5 – Visit your supplier, and have them visit you.
It amazes me how many of my clients have strategic relationships with suppliers all over the world and yet have never visited each other. If that’s you, things should change. Get on a plane and go there. Give your supplier the opportunity to also do the same and visit you. Meeting face to face will always help your relationship. What will also help is seeing the shape of your supplier’s facility, the quality of their people, the care (or not) they take with their products. You’ll walk away feeling even more – or less – comfortable with this partner and in either case that knowledge will help you determine the direction of your long-term relationship.
6 – Finally, consider a long term buy.
If you like the vendor and you see a future, then try and lock it down. Maybe buy in bulk at a discount. Or negotiate a long-term supply contract with fixed prices. That way both you and the supplier can avoid surprises and each of you have a contract to refer to if any questions or issues arise. Your supplier wants your business forever and you may be prepared to do just that – for the right price and commitment. When you find a good partner, don’t let them go. Bring them closer.
Your vendors and suppliers – particularly the larger ones – are likely key to your business. They’re providing you with materials that you use as a core part of your products. When they miss deadlines, don’t live up to their promises, or become inconsistent with their pricing your business can be significantly affected. So you need to take care of them. That way they’ll take care of you.
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