Building a Better Vendor Relationship
Clients and sales are typically the top focus for any company. Without a consistent stream of revenue coming in, it would be difficult to pay employees, rent, loan payments, and pretty much any other expense that is necessary to run a business.
While we typically shine the spotlight on the client, the relationships with the companies that you purchase goods and services from can take a back seat. These are considered vendor relationships. After all, you are paying for a vendor’s products or services, what more do you need to do?
Building and maintaining strong relationships with your vendors brings several strategic advantages to your company. Vendors can directly impact your bottom line, help you grow by becoming a potential referral source for new business, as well as build your reputation.
Vendor relationships and your bottom line
If your company sells a product or service, you likely rely on outside vendors to conduct your business. Some vendor relationships are obvious, others are not. Companies often use vendors and suppliers to;
- Purchase parts or materials for products that are sold
- Provide creative and consulting services, such as marketing, design, and communications
- Computer and technology services
- Office supplies
Suppliers of goods and services will vary based on industry. Restaurants have food and beverage suppliers, doctors and dentists have vendors that provide medical equipment and supplies, and a technology company may rely on outside consultants for its software and hardware needs. Remember that relationships also exist with landlords, insurance agents, and bankers.
Establishing and maintaining good relationships with your vendors can be a key strategy in keeping your costs low. A good track record with your vendors can lead to better pricing, as well as discounts and special promotions. Moreover, if you’ve fallen on hard times, a strong vendor relationship can help when working out payment arrangements and avoid disruption of services. This can be critical if you are highly reliant upon third party vendors to conduct your business. Finally, connecting with the right vendors can give your company an advantage over the competition. A vendor’s reputation and standing within the industry can lend credibility to a company.
Vendors can help your business grow
Companies prosper when their customers do. When you maintain a good relationship with your vendor, they can be excellent sources of new client referrals. After all, you are the customer to your vendor. Your success benefits them as well.
In other cases, a business that is planning to grow or expand in the future may be in need of credit. Vendors are good sources for credit references when seeking a loan or line of credit from a bank. In some cases, you may be seeking more favorable credit terms with the vendor. Maintaining a healthy relationship may assist you with receiving the financing or credit you are seeking to build your business.
Vendors can build your reputation, or damage it
Your relationship with your vendor can also impact your reputation. Treating your vendors respectfully, paying them on time, and proper communication can go a long way in building a good reputation in your community or within your industry. Conversely, a poor working relationship can damage your reputation, potentially costing you customers, savings, and even other vendor relationships.
Choose vendors wisely – When selecting a new vendor, spend time reviewing their proposals and contracts. Ask questions and nail down the specifics of the arrangement. Finally, it is helpful to understand how they do business and meet deadlines. Choosing vendors that provide quality products or services that meet your timeframe can be critical to the success of your business, as well as the relationship with the vendor.
Pay your bills on time – Be sure to pay your bills on time. If you have a seasonal business that impacts your cash flow or if you know that you may need extended credit terms, discuss this with the vendor before you make the purchase. While emergencies and unforeseen events can happen, regularly paying your vendors late can cause ill will in your relationship. Partnering with your vendor on payment-related issues can help them to become a solution to a problem. Remember, if you are unable to pay your vendor, they may be unable to pay their employees or their bills. This creates a stress on everyone. .
Take care of your vendors – Putting unrealistic deadlines or undue pressure on your vendors to deliver is a quick way to cause problems. Holding a vendor accountable for agreed-upon quality or delivery should be done respectfully. As a customer, if there are practices that you can follow to help the vendor meet your needs, find out how you can help. Perhaps it is a face-to-face meeting, documenting established timelines, or submitting a request in writing. Learning how to work with you vendors will help you to take better care of them.
Remember – you are the customer – Keep your vendors apprised of your business. Let them know when your company has achieved certain milestones, if you are introducing a new product or service, or are undergoing personnel changes. Good communication can solidify a relationship. Consider making visits to key vendors, just as you would with your customers. Meet them in their space and take the time to discuss how you can work better together.
The experienced bookkeepers at Valley Business Centre have delivered quality service to small and medium-sized businesses since 1990. We provide bookkeeping and payroll services to clients located in Whistler, Squamish, the Sea to the Sky corridor, BC, and beyond. We can help your company keep your books current and run payroll. If the daily stress of maintaining your bookkeeping or payroll systems are dragging you down, contact the bookkeeping specialists at Valley Business Centre today.
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