Harmony with Your Suppliers

Your company needs from your suppliers valuable products and services. Products and services that help your company make money (financial value), perform necessary corporate activities (functional value) and make your employees enjoy the process (emotional value). That latter implies that your suppliers treat your employees well in the process.

A very important way in which suppliers generate financial value for your company is by offering you a trade credit. Trade credit is the credit extended by your supplier to your company for the purchase of products and/or services. Thus, trade credit facilitates the purchase of supplies without immediate payment.

Trade credit is a very important source of short-term financing for businesses. It is the single largest sources of financing in an overwhelming majority of business-to-business (B2B) transactions in the economical developed nations and is a critical source of capital for a majority of all business entities.

For example, for Wal-Mart (the largest retailer in the world, by the way) trade credit is a larger source of financing than bank borrowings. The amount of trade credit for Wal-Mart is eight times more than the amount of capital invested by its shareholders. 

Your company reciprocates by paying a just and fair price for these products and services (generating financial value), cooperating fully in the process of business transactions – up to integrating its business processes with those of your suppliers (functional value) and by treating your suppliers well (emotional value). The latter may require conducting appropriate corporate communications campaigns aimed at your suppliers.