Financial Guide for SMEs - SME Corporation Malaysia

Financial Guide for SMEsTIPS FOR IMPROVING SUPPLIER PAYMENTS•Extend payment terms. Extending the payment period from 30 to 45days may help to reduce fluctuations in cash flows.• Some larger companies may accept quarterly payments, which canhelp in forecasting cash flow requirements.• Payment terms should specify that payment terms commence fromcomplete delivery, as opposed to part delivery. This should also includegoods or services that have not been provided as agreed.••••Where goods are returned, either:o a new invoice should be produced, and this is the initiation ofthe payment terms; oro disputed invoices are held over until a credit note is received.Initiate a structured payment run, usually once a month (i.e. on thelast day of the month) and stick to it.Ensure that your systems have good controls so that suppliers are not:o paid early. Where financial systems are used, ensure paymentdate is automated from approved supplier details and no changeto the automated date is possible without authorisation.o over paid. All received goods must be checked against thepurchase orders and the totals on invoices checked.o paid twice. Pay only on statement.Continuously review supplier contracts for opportunities such as:o improved pricingo effective discountingo improved delivery (you will not need to order so early and hencewill be able to defer payment).57Chapter 2-5 p22-65 Eng.indd 578/15/11 5:01:58 PM