At its most basic level, purchasing power refers to a company’s ability to buy the goods and services it needs. That includes everything from sourcing raw materials and paying employees to securing transportation for finished products.
Purchasing power is essential for companies of any size and in any industry to maintain and grow their businesses. And in a time of increased costs and supply chain challenges, having ready access to cash has become more important than ever to manage expenses, stay competitive and prepare for what’s ahead.
Businesses looking to increase their purchasing power may want to consider three key tips:
1. Take advantage of modern payment options
The new cashless environment has brought unprecedented speed and security to accounts payable. Given the ability to send just-in-time payments electronically, companies now have the power to keep more of their money longer. While some businesses may be slow to switch up existing processes, failing to evolve payments could significantly dampen the ability to keep cash on hand.
2. Make the most of monthly expenses
Purchasing cards may have once been an “extra” for businesses, but today they’re an essential tool that delivers control and reporting. They give companies the ability to stretch out payments – with a gap between the transaction date and payment due date – and most offer cash back. For small businesses, credit lines may be surprisingly high, giving companies the ability to charge thousands of dollars each month. A quick calculation of the cash-back potential just for recurring monthly bills, not to mention supplies and other purchases, reveals an easy way companies could make substantially more money without increasing sales.
3. Look to trusted consultants
To be successful, companies must have attorneys, CPAs, bankers and other experts they trust – and be open to change. Companies should look to the people who play an advisory role in their business to offer experience and insights, including advice that may help them strengthen purchasing power. While digital tools now make applying for credit cards or loans easy, it’s important not to dismiss the value of a consultative approach. An ongoing relationship with a trusted banker can not only guide businesses toward a positive outcome but also help them determine when other options that protect their credit may be a better fit.