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'll pay them. For maximum convenience you will probably aim to set up an account with each of your major suppliers, which might include some or all of the following:
- specialist sandwich filling manufacturers
- sandwich manufacturers
- grocery and catering wholesalers, including specialist 'delivered wholesalers'
- local fresh produce suppliers
- cash and carries
- Fairtrade suppliers - if you decide to offer Fairtrade products or to use Fairtrade ingredients
- packaging suppliers
You will probably make daily purchases of certain perishable ingredients, weekly purchases of less perishable items, and monthly purchases of items like packaging materials.
The trade journal International Sandwich and Food to Go News includes a wealth of information about - and advertisements for - specialist suppliers to the sandwich industry. The journal also publishes an annual trade directory of suppliers to the industry. The British Sandwich Association (BSA) has a directory of specialist manufacturers and suppliers on its website.
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. This is known as paying on a pro forma basis.
Once your account has been set up you'll be invoiced at regular intervals and expected to pay within a certain number of days of receiving each invoice. Credit periods usually vary between seven and 30 days.
Discounts from suppliers
You may be offered - or be able to negotiate - various discounts from your suppliers for:
- paying invoices within a specified period, or paying by direct debit
- buying stock in large quantities
If you're sure you'll 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. But think carefully about these discounts. You might prefer to pay a little more for your goods and buy them as and when you need them. Bear in mind that this stock will need to be stored somewhere until it's used or sold. Be careful not to tie up your valuable cash in stock that you won't use for ages, or which has a limited shelf life. Never be persuaded to buy more than you think you will actually need!
Some suppliers may also offer you items like free display stands, help with promotions and so on. These offers are likely to be related to the amount of business you put their way.
You might consider joining forces with other similar catering establishments and placing larger orders with suppliers so that you can all benefit from volume discounts.