In the event business, reputation is everything. Most event planners and producers operate a small - and I emphasize small - business. If that reputation becomes sullied in any way, there is little chance of recovery. One of the absolute best and easiest ways to maintain a stellar reputation is to also maintain a positive relationship with your suppliers. Although I could go into a list of how to treat suppliers, what I want to emphasize in this short post is the need to pay them promptly.
Most accountants will advise that accounts payable should be allowed to take the maximum time permissible. For example, if the event producer has contracted with a lighting company to install and operate a lighting system for the event, and the contract allows for up to 30 days after the event before full payment is required, then in order to keep as much cash available as possible, the full 30 day time period should be used up before payment. A word of caution is due here, however. In reality, this can sometimes spell trouble for the event producer if followed to the letter. Experience has shown that suppliers who are paid promptly by event producers are much more likely to offer discounts, better service, and even longer payment terms when necessary to those event producers for future events, since they know the event producers to be reputable. Far better, in fact, is to have a cheque in hand at the event to give final payment to the supplier in order to maintain and enhance this reputation. This is particularly true for small suppliers such as individual entertainers who themselves are often operating on the edge of bankruptcy.
I know. It was always my policy to pay performers and suppliers either at the event if I was there, or by cheque in the mail the day following. I can tell you for sure that this pays off. I frequently received referrals to clients from suppliers. In fact, one even resulted in a contract worth over $80,000.
Keep this in mind the next time you're considering waiting to pay suppliers until your client pays you rather than paying your suppliers immediately.
Most accountants will advise that accounts payable should be allowed to take the maximum time permissible. For example, if the event producer has contracted with a lighting company to install and operate a lighting system for the event, and the contract allows for up to 30 days after the event before full payment is required, then in order to keep as much cash available as possible, the full 30 day time period should be used up before payment. A word of caution is due here, however. In reality, this can sometimes spell trouble for the event producer if followed to the letter. Experience has shown that suppliers who are paid promptly by event producers are much more likely to offer discounts, better service, and even longer payment terms when necessary to those event producers for future events, since they know the event producers to be reputable. Far better, in fact, is to have a cheque in hand at the event to give final payment to the supplier in order to maintain and enhance this reputation. This is particularly true for small suppliers such as individual entertainers who themselves are often operating on the edge of bankruptcy.
I know. It was always my policy to pay performers and suppliers either at the event if I was there, or by cheque in the mail the day following. I can tell you for sure that this pays off. I frequently received referrals to clients from suppliers. In fact, one even resulted in a contract worth over $80,000.
Keep this in mind the next time you're considering waiting to pay suppliers until your client pays you rather than paying your suppliers immediately.
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