Currently, all our vendors are set up as “pay immediate.” I wonder what the average turnaround should be for setting up new vendors? Suggestions?

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Best practice is not to pay everything immediately, although if your P2P process is so broken that by the time an invoice is ready to pay, it’s late – in that case you’re beyond terms and overdue, so must pay right away. Not a position you want to be in.

Most terms in the U.S. are 30 days. And most organizations try to pay on time, but not early. I’m sure there must be someone at the bank that can discuss the value of holding onto cash. The two biggest considerations are 1) your cash flow and cash management (ensuring you have the cash needed to operate, and that the timing of your payments does not get ahead of the timing of your cash receipts); and 2) the value of cash on hand – in the unusually low interest-rate environment this is perhaps harder to grasp, though with large amounts, even fractional interest can be significant.

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I hope the above helps in getting you started.

 

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