Warning Signs:

• Decrease in cost of goods sold to payables.
• Lost cash discounts.
• Significant increase in trade payables.

Steps to Improve:

• Negotiate well: payment terms, storage, price, shipment.
• Use supplier capital, extended terms; sell on consignment.
• Take advantage of prompt payment discounts.
• Take advantage of favorable purchase discounts; otherwise pay net 45 days.
• Pay bills when they're due, but not beforehand.
• Pay on original invoices, not statements, to avoid double payments.