You might purchase alarm systems, cameras, sensors and other security equipment from several different suppliers - for example, manufacturers, importers or wholesalers. You are also likely to need supplies of materials such as cables, wiring, connectors, plugs and sockets and so on that you might buy from specialist wholesalers or from local electrical retailers and hardware stores.
When you buy equipment or materials 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.
Setting up an account
For convenience it is 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
- volume discounts
In some cases suppliers may impose minimum order conditions and charge for delivery.