Accounts Payable & Other Liabilities
- Decrease in cost of goods sold to payables.
- Lost cash discounts.
- Significant increase in trade payables.
Steps to Improve:
- Negotiate well: payment terms, storage, price, shipment.
- Use supplier capital, extended terms; sell on consignment.
- Take advantage of prompt payment discounts.
- Take advantage of favorable purchase discounts; otherwise pay net 45 days.
- Pay bills when they’re due, but not beforehand.
- Pay on original invoices not statements to avoid double payments.