Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsChecklist for Managing Suppliers & Payments to SuppliersEstablishalternativesuppliersReviewregularlyIf you have one main supplier, make sure that you havean agreement in place with an alternative suppliers to coverany risk that the chosen supplier cannot provide the agreedservice at any time.Monitor the selected supplier(s) and regularly review theirperformance against your priorities (priorities may change asthe business grows).2. Payment TermsActionNegotiatetermsDescriptionAgree on the payment terms with suppliers before entering intoa transaction.Includeterms onthe orderConsiderdiscountbenefi tPay ontermsHavedamagedgoodsproceduresReviewtermsregularlyDocument standard payment terms on each purchase order.Calculate the benefi t of taking a discount for early payment.Ensure all suppliers are paid on agreed terms, not earlier andnot too late (check this on a regular basis).Have an agreed process in place for where damaged goodsor unsuitable goods are supplied. Do not withhold paymentwithout communicating to the supplier that there is an issue.Review the terms with each supplier regularly. If you fi nd analternative supplier that can provide better terms, fi rst discussthis with your existing supplier before changing over. They maybe able to match this offer and will appreciate the loyalty youhave shown.55Chapter 2-5 p22-65 Eng.indd 558/15/11 5:01:58 PM