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As business owner, you know how important it is to stay on top of payments to suppliers. As the maxim goes, “you need to spend money to make money.” However, let us not forget a more granular, golden kernel of wisdom: “You need to pay on time to keep your suppliers happy.”

However, making timely payments at varying times of the month and with different payment methods can be complicated and costly for your accounts payable. Not to mention it could create issues in your cash flow.

Streamlining supplier payments—devising procedures and creative solutions and making use of resources to simplify the payment process—can save you time and bolster your business’s efficiencies. It can also help you maintain good and collaborative relationships with your suppliers.

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Here are seven ways small and medium-sized businesses can improve the way they process payments to suppliers:

1. Automate payments

There are many advantages to automating payments to suppliers. First, you can be certain that your suppliers are receiving their payments on time. In turn, you will be maintaining positive relations and avoiding late payment charges.

Other benefits:

  • Reduced oversights
  • Improved accuracy
  • Streamlined processes
  • Easy-to-track digital paper trail

2. Batch-process cheques

Creating and processing cheques can be a costly payment method, not to mention that it is counter-productive when it comes to maintaining cash flow. A survey by the HR management software company PaySavvy¹ found that the total cost of issuing a single cheque is US$17 when you factor in secondary costs, such as bank fees, fraud protection and cheque reconciliation services.

Additional savings:

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  • Minimized supplies, postage and special equipment
  • Decreased time and costs associated with processing your cheques in batches

3. Time credit card payments

If you are paying by credit card, time your payments so they are in sync with your cash flow. For instance, if you tend to receive an influx of cash at the end of the month, negotiate payment dates with suppliers so they hit at the beginning of the following month.


  • Enough cash on hand to pay suppliers
  • Additional time to bolster your reserves

4. Encourage your suppliers to accept credit card payments

When issuing payments, the benefits of using a credit card to issue and receive payments are clear:

  • Decreased costs of cheque processing
  • Minimized discrepancies and errors with cheques
  • An added billing cycle and grace period means you’ll hold on to your money longer
  • Consistent monthly withdrawals can lead to stronger cash flow and simplified accounting
  • Card rewards and rebates

As for receiving payments, you can get paid sooner reducing your Days Sales Outstanding (DSO) and, in turn, optimizing cash flow. Plus, by making electronic payments, you automate processes, reduce related costs and save time by nixing cheques and wire transfers.

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On the flip side, some suppliers prefer to receive cheques as they might not be up to speed with the technology or have the equipment to accept credit card payments. Take time to explain to your suppliers the benefits of this method, such as expediting payments, saving time and money on their end, driving more sales and boosting customer loyalty.

5. Extend payment terms

Discuss with your suppliers the possibility of extending payment terms. For instance, ask a large volume supplier if you can pay bi-monthly or quarterly. While that might be a challenge for some vendors, even extending payment terms by a few days could make a difference.

Incentivizing can also work here; if you can guarantee a certain amount in sales in exchange for such flexibility, the supplier might find it to their benefit to consider such an arrangement.


  • Greater control over when you’ll make payments
  • The ability to set up a payment cycle that works best for your business’ cash flow cycle

6. Ask for a discount

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Conversely, you could ask vendors for a discount if you pay early. For instance, if invoices from a supplier are set at net 30, you may be able to negotiate a 2 per cent discount if you pay the invoice within 10 days. A 2 per cent discount from a high-volume supplier with whom you have an ongoing relationship could result in significant savings for your business. And, by leveraging an American Express Corporate Card to process payments, you can push out your days payable outstanding (DPO).

7. Benefit from unsecured lending

To hold on to your cash longer, consider American Express’ working capital solutions. Your suppliers will be paid within five business days, and you will have up to 55 days to pay back the credit line depending on when charges are posted, whether your account is in good standing and the closing date of your statement. You will be able to extend your accounts payable and enjoy improved cash flow and a more stable and predictable working capital.


Content produced by American Express Canada. The Globe and Mail was not involved in its creation.

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