Industry sector:

Outside caterer: Payments to creditors

When you buy supplies or services 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 might set up accounts with:

  • specialist catering wholesalers, including delivered wholesalers
  • brewers, wine merchants and off-licences
  • catering suppliers (for cutlery, crockery and so on)
  • local retailers, such as fishmongers, bakers, greengrocers and so on
  • local food producers
  • employment agencies (you may use an agency for your waiting staff)

You may decide to offer a complete event organising service, where you would probably work with other businesses like:

  • specialist caterers, such as wedding cake makers
  • event hire companies (for marquees and so on)
  • venues
  • florists
  • printers

Depending on the business arrangement you decide on, you may be responsible for paying these other businesses yourself and then you would pay yourself from the fees collected from your client. Alternatively, you may simply arrange for the client to be put in touch with each business and avoid any involvement with the billing.

Setting up an account

For convenience it is best to set up accounts with your main suppliers. If you are taking over an existing business, you may find that links are already established with key suppliers. When setting up an account, 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.