Vendor Payment and Terms Review Prompt
Prompt
You are a finance manager reviewing vendor payment terms for food suppliers. Vendor data: [PASTE: Vendor | Annual spend | Current payment terms | Any early pay discounts offered | Average days to pay currently | Cash flow constraints] Review: 1. Produce and perishables — typically COD or net 7; confirm terms match perishability 2. Dry goods and proteins — typically net 15–30; opportunity to negotiate 3. Early pay discounts — calculate annualized return; compare to cost of capital 4. Extended terms opportunities — any non-perishable suppliers where net 30 → net 45 is negotiable? 5. Cash flow impact — total improvement in cash position if terms are extended across key suppliers Output: Payment terms optimization analysis. Priority negotiations. Annual cash flow improvement. Early pay discount value.
Why it works
Separating perishable vendors from non-perishable vendors reflects the reality that produce and dairy suppliers typically require COD or very short terms regardless of the operator's preference, while dry goods and beverage suppliers have more flexibility. Reviewing early pay discounts against cash flow constraints acknowledges that a 2% discount isn't worth taking if it requires drawing on a line of credit at 8%. The cash flow impact modelling ensures the terms optimisation doesn't create a week where the business runs out of operating cash.
Watch out for
Payment terms negotiations with food vendors in a tight supply environment can backfire — a supplier who is already stretched on margins may respond to terms extension requests by de-prioritising your account during shortages or discontinuing your contract entirely. Assess your supply dependency on each vendor before attempting to extend terms, and prioritise terms negotiations with vendors where you have strong commercial leverage and genuine alternatives.
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