In the 90’s I came up with an initiative which I believe was the first in the Nursery trade and probably has never been done since, this was to pay suppliers in a day.
We had been getting between 2% – 5% discount by paying our invoices in 30 days, but if we re-negotiated the terms to pay in a day then we could possibly achieve a 7% – 10% settlement discount every month.
All we had to do was persuade the suppliers to take up our offer and if they did we would save around £200K a year. The majority came on board immediately as they needed the money for their goods, because as everyone knows the longer you leave the invoice outstanding the more likely it is that you won’t get paid.
We did achieve an extra £160K on the bottom line as between 1995 and 1996 our profits rose from £323K to £484K making £161K extra profit without having to put up our prices to the customer.