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 you will make to your creditors (including VAT) in the months in which you will pay them. For maximum convenience - and to get the best terms of trade - you will probably aim to set up an account with each of your major suppliers. If you aren't planning on serving food and drink, your main suppliers are likely to be your internet service provider (who will supply your internet connection) and software publishers (particularly if you offer online and networked gaming for which you'll need to get the proper licences for commercial use), as well as computer sundries suppliers.
If you are intending to serve food as well, then you may look to set up accounts with some or all of the following:
- sandwich bars (you may buy in ready-made food items rather than making your own)
- specialist wholesalers and catering suppliers
- brewers, wine merchants and off-licences if you are licensed to sell alcohol
- local fresh produce suppliers such as greengrocers, butchers and fishmongers
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 each order at the time you place it. This is known as a pro forma basis.
Once your account has been set up you will be invoiced at monthly or fortnightly intervals, and expected to pay within a certain number of days of receiving the invoice.
You may be offered or be able to negotiate various discounts from your suppliers for:
- paying your bill within a specified period, or paying by direct debit
- buying stock in large quantities
However, think carefully about these - you might prefer to pay a little more for your goods and have a longer credit period so that you have the chance to make some sales before you pay your suppliers. If you are sure that you will use up all the stock you buy in bulk then it can be a good idea to buy large quantities to qualify for volume discounts. What you don't want to do is tie up your valuable cash in stock that you won't use for ages or which has a limited shelf life. Storage problems might also be an issue.
You might consider joining forces with other, similar catering establishments and placing larger orders for supplies so that you benefit from volume discounts.