Classic car restorer: Payments to creditors

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 probably be setting up accounts with motor and paint factors, specialist parts suppliers, tool/garage equipment suppliers and specialists to whom you sub-contract work (for example re-upholstering and trimming, wheel refurbishment and so on).

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 the 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.