Managing Supplier Relationships

Managing supplier relationships is an important aspect of running your new small business, particularly if you are a retailer. But not matter what type of business model you decide to run with, you will have to deal with suppliers!

Finding Suppliers

When you are setting up your small business, one of the things you will have to put some energy into is finding the right small business suppliers for your business.

Applying for Supplier Credit

Applying for supplier credit is one way of financing at least some of your working capital.

Supplier financing or trade credit is where your supplier agrees to supply you with inventory on a credit account, possibly with extended credit terms, and can be a valuable source of start up finance.

Not all suppliers will be prepared to offer credit to a new (unproven) business but it is an option worth investigating with your suppliers.

Accounting for Suppliers

If you are able to convince some or all of your suppliers that you are a good risk (i.e. that you will actually pay your bills when they arrive!), you will need to track your purchases and manage your creditor accounts.

As a newly established business it is critical for you to build a strong relationship with your suppliers. This means that you must do everything in your power to meet the terms of your agreement. There are literally thousands of potentially profitable business ventures that have been forced into liquidation by creditors that have not been paid!

Managing Inventory

Managing your inventory involves everything from the ordering and receiving the goods, how you record your inventory in your balance sheet and how you account for the cost of your inventory as you sell your inventory items.

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