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By E. James Burton
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E. James Burton is Dean of the Jennings A. Jones College of Business at Middle Tennessee State University in Murfreesboro, TN. He holds a Ph.D in accountancy, as well as an MBA. His books include Total Business Planning, Accounting and Finance for Your Small Business, and Sales and Operations for Your Small Business, all published by John Wiley & Sons.
Q. I'm behind with some of my vendors and I'm afraid it will affect my credit rating. What can I do to improve my standing with them?
A. A variant of the Golden Rule is applicable here: Do unto your vendors as you would have your customers do unto you. Most likely, that means:
- Be preemptive.
Don't wait for the vendor to initiate action. Make the phone call to them before they have to call you. Give them facts about why you've been paying late. You might even offer phone numbers of third parties, like your banker, who can back you up.
- Be strategic.
Don't let them suggest what to do. Present a plan first. It's likely to be more favorable than anything they would create. And they'll prefer working with something handed to them, rather than having to make up a plan themselves.
- Be honest.
Tell them the truth. And promise only what you are sure you can deliver.
- Be consistent.
Do whatever you tell them you'll do, when you tell them you'll do it. At the same time, if your situation changes significantly and you simply can't follow through, let them know immediately.
- Be cooperative.
Particularly if they have a considerable amount invested in you, vendors may want financial information, references, or collateral. Provide as much material as you can, even if it is not what you're used to.
- Be loyal.
If vendors are good enough to stick by you in difficult times, reward them with loyalty in better times. And, when things turn up, pay promptly, even early.
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