Industry sector:

Ice cream parlour: 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, where applicable) in the months when you will pay them.

The type and number of suppliers that you deal with will depend on the nature of your business. If you enter into a franchise agreement with an ice cream manufacturer or other franchisor, it is likely that you will have to stock exclusively that manufacturer's products (although you may be able to purchase non-ice cream related products, such as canned drinks, from other sources).

If you don't enter into an exclusive deal then you might buy your stock from some or all of the following suppliers:

  • ice cream manufacturers and wholesalers, and wholesalers of specialist supplies such as wafers and cones
  • catering and other wholesalers
  • distributors
  • cash and carries
  • manufacturers
  • specialist Fairtrade suppliers

You may decide that you are going to manufacture your own ice cream. If so, you might deal with the following suppliers:

  • dairy processors
  • sugar refiners
  • fruit wholesalers or growers' co-operatives
  • farmers
  • specialist food ingredient manufacturers and suppliers
  • specialist 'one stop' wholesalers that supply the ice cream trade

Some of these suppliers may allow you to set up accounts with them while others, such as cash and carries, may not.

The Ice Cream Alliance has an A-Z list of specialist industry suppliers on their website.

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:

  • bulk discounts on sundries and some ice cream products, for example 5%
  • retrospective rebates/bonuses for volume throughput (how much you sell) - these may be paid six monthly or annually and typically range from around 1.25% upwards
  • seasonal discounts, with lower prices during winter

Some suppliers may also offer items like free display stands, help with promotions and so on. These are likely to be linked to the amount of business you put their way.