When you buy supplies on account instead of paying cash there and then, your suppliers are your creditors until you pay them. Enter in your cash flow forecast the payments that you will make to your creditors (including VAT) in the months in which you will pay them.
You will be using a number of different suppliers such as specialist turf seed suppliers and agricultural suppliers for fertilisers, herbicides, netting and so on.
Don't enter payments you make to suppliers of fuel for your agricultural machinery here - these are dealt with elsewhere.
Setting up an account
For convenience and to get the best terms of trade it is usually best to set up accounts with your main suppliers. To do this you may be asked to provide bank and trade references. Until the account facility has been granted you will have to pay for your order at the time you place it. This is known as paying on a pro forma basis.
Once your account has been set up you will be invoiced at regular intervals and expected to pay within a certain number of days of receiving each invoice.
Discounts from suppliers
You may be offered, or be able to negotiate, various discounts from your suppliers. Examples include:
- early settlement discounts
- retrospective rebates
- volume discounts
In some cases suppliers may impose minimum order conditions and charge for delivery.