Why paying on time makes good business sense

Goodwill is worth its weight in gold

My parents ran a small business - in fact they still do. Growing up with that made you very aware of the importance of goodwill in any business. If you look after someone, generally they will reward you with loyalty and when the chips are down, they will go out of their way to help you out when it's needed.

When you are working with long term suppliers or partners, looking after others when you can goes a long way. Keeping that 'goodwill bank' well in credit will enable you to run your business more effectively, more efficiently and deliver the highest quality of service because it means the people you have involved actually care about what they are doing and care about you, because you have shown, consistently, that you care about them.

If you pay someone late, you are saying you don't value them, or the service they have given you. If someone has done a good job, reward them by paying early and next time you will get as good a job, if not better. If you are known to be a consistent, timely payer, and you don't need to be chased to pay an invoice, most people will value and appreciate it. Then when you need to hit a deadline and they have two jobs on their desk, which one are they going to prioritise? If something needs a fast turnaround and they need to work late, or cancel a night out, they are far more likely to go out of their way for you if they feel like you have looked after them.

I have also found, time and time again, that economically this makes sense too. If you have a good client that treats you well, you are more likely to throw in some of the small extras you may have done along the way, or go out of your way to point out an error, or even a more efficient way of doing things. Wasted time and effort is in no-one's interest - efficiently run businesses are more successful and more profitable, which in the long run is better for everyone involved, be they a supplier of materials or labour. Suppliers and businesses can and do help one another where the relationships are strong, and all are stronger and more successful and secure as a result.

So, every chance you get, pay early. If you pay late, make sure you apologise and pay immediately. We are all human, we all forget a holiday, find a clash of deadlines or staff sickness means we perhaps miss paying a bill, but then it's about fixing it as soon as you can and if it's not the norm, people will be all the more understanding. If you have a cash flow issue, let people know their payment will be a bit late before the due date, and make an extra effort to pay the next bill early - letting them know you have done that to show you appreciate their understanding.

A little bit of goodwill goes a long, long way and you never know when you will need it.