Industry sector:

Driveways and patios: 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. 'Payments to creditors' are the payments you will make every month or so to your major suppliers of goods and materials such as paving blocks, profiles and slabs, kerb stones, aggregates, ready-mixed concrete, flexible membrane and so on that you purchase. Other items that you are likely to purchase on a regular basis include cutting disks and miscellaneous building and landscaping supplies.

For maximum convenience you will probably aim to set up an account with each of your main suppliers, who might include block and slab manufacturers, quarries, aggregate merchants and builders' merchants.

You might decide to stick with one or two main suppliers, or you may prefer to shop around regularly for the best deals. Some of your main suppliers may offer you discounts if you purchase certain items in large quantities. Bear this in mind when shopping around. Some paving block manufacturers have become quite well known with the general public and it may be an advantage to stick with a popular brand, particularly if the manufacturer will agree to list you as a local 'approved supplier'.

Enter in your cash flow forecast the payments you will make to your creditors (including VAT) in the months in which you will pay them.

Setting up an account

To set up an account you may be asked to provide bank and trade references and until the account facility has been granted you will have to pay for your order at the time you place it or on delivery (possibly with an up-front deposit). This is known as paying on a pro forma basis.

Once your account has been set up you will normally be invoiced at monthly intervals and expected to pay within a certain number of days of receiving the invoice.