I wanted to pose a rather interesting question to garner feedback from the experts. How can you sustain good longer-term relations with business partners (customers and vendors) in the face of the need to improve cash flow and hold down bank borrowing?
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Sustaining good long term relations with business partners that is customers and vendors in face of improving cash flow and holding down bank borrowing.
In case of customers, the long term relationships can be maintained by providing excellent products, backed by impeccable service at reasonable prices. This is the main method, this apart; the relationship can be maintained by offering discounts, promotions and complementary gifts. Further, the relationship can best be maintained by differentiation. If the product sold by your company is not available elsewhere, the customers will maintain relationships.
In the context of credit allowed to customers. One option is to disallow credit sales; this instantly improves the cash inflow and does not disturb the relationship. However, if your company wants to allow credit then the methods of realizing payment quickly can be used by your collection department. Your pricing policy goes a long way in maintaining relationships as well as improving your cash flow, this includes:
1. Keep close track of your competitor's costs. Don't underbid or lose work because you overbid. When fees are changing, don't get left behind and lose valuable assignments from overbidding, or income from underbidding.
2. Don't offer lower prices to a client that isn't price sensitive. Why give away your profits? Not everyone gives ...
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"One option is to disallow credit sales; this instantly improves the cash inflow and does not disturb the relationship. However, if your company wants to allow credit then the methods of realizing payment quickly can be..."