M36ManageFinance· Module 5
Payables and Supplier Terms
Suppliers are paid whenever there is money, in whatever order the loudest one demands.
- Stabilise
- Manage
- Finance
- Operations
- ~5 min · Checklist
The business problem
Without a payment policy, suppliers are paid reactively. Some are paid early and others late; discounts are missed; important suppliers are strained, and the business loses negotiating power and goodwill.
Why it matters
Managed payables protect cash and supplier relationships at the same time. A predictable payment routine makes the business a better customer and a stronger negotiator.
What you will learn
- Set payment terms and priorities
- Run a scheduled weekly or fortnightly payment run
- Negotiate terms that match your cash cycle
- Match invoices to orders and receipts before paying
Core questions
- What terms do we have with each major supplier?
- Who approves payments, and when?
- Which suppliers are critical to operations?
- Are we paying for goods we did not receive?
Work through the module
CaseWhat is happening?
Bottling plant, 70 people · Illustrative teaching case
A bottling plant's finance team pays suppliers as they call. A critical packaging supplier puts the account on hold during peak season while less critical suppliers have been paid early. The plant introduces a fortnightly payment run, a priority list and negotiated terms aligned to its customer collection cycle.
DecisionWhat does the leader need to decide?
Keep paying reactively, or pay on a schedule by agreed priority?
FrameworkHow should they think about the problem?
Scheduled, matched, prioritised
Pay on a fixed schedule; pay only matched invoices (order, receipt, invoice); pay by agreed priority and terms, not by pressure. Communicate proactively when terms must change.
ToolWhat can they use?
Payment run checklistChecklist
- Invoices due this cycle
- Three-way match complete
- Priority suppliers flagged
- Cash forecast checked
- Approval by authorised signatory
ApplicationHow does it apply to their business?
Apply it to your own business:
- List your top 20 suppliers with terms and actual payment days
- Identify critical suppliers
- Draft a payment policy
ImplementationWhat changes?
What should change in the business:
- Introduce a fixed payment run
- Renegotiate terms with key suppliers
- Communicate the new process to suppliers
ReviewDid it work?
How to tell whether the change worked:
- Are suppliers being paid on agreed terms?
- Have supply interruptions reduced?
- Has days payable moved towards the target?
After this module you should be able to decide
Keep paying reactively, or pay on a schedule by agreed priority?
And leave with: A payment policy and a weekly payment run.
Sequence · Finance