A supplier affects much more than your purchase costs. Delivery times, product quality and the way they handle a problem can influence your sales and cash flow. A strong relationship starts with clear expectations and regular follow-up.
Key points
- Define your needs before comparing offers.
- Assess total cost, reliability and terms, as well as the unit price.
- Record the essentials: quality, quantities, delivery, payment and how defects will be handled.
- Have a backup option for supplies your business cannot operate without.
Define what your business actually needs
Specify the product or service, expected quality, quantities, deadlines and any particular constraints. Separate essential requirements from preferences.
For a service provider, describe the deliverables and who is responsible for what. For goods, specify the product characteristics, acceptable tolerances and checks on receipt.
This preparation lets you compare equivalent offers. Two prices are not comparable if one includes delivery, installation and support while the other charges for them separately.
Assess more than the price
Look at the price, additional charges, lead times, consistency of quality and the supplier’s capacity to handle your volumes. Ask for references or a sample where useful.
Consider dependency too: are there alternatives, and how long would switching take? A highly customised product can be difficult to replace even when the contract seems flexible.
A simple scorecard is often enough: quality, delivery, total cost, service and risk. Weight the criteria to suit your business instead of applying the same score to every purchase.
The lowest unit price can produce the highest total cost
Illustrative comparison for 1,000 units, on the same basis and excluding recoverable VAT.
| Cost per unit | Supplier A | Supplier B |
|---|---|---|
| Purchase price | CHF 10.00 | CHF 11.00 |
| Transport | CHF 1.00 | CHF 0.30 |
| Estimated cost of defects and rework | CHF 0.80 | CHF 0.10 |
| Total cost | CHF 11.80 | CHF 11.40 |
Supplier B costs CHF 11,400, compared with CHF 11,800 for A: CHF 400 less, despite the higher quoted price. The defect costs are assumptions to support with actual incident records, not market averages.
Use a weighted scorecard to explain your choice
Continuing the example, these illustrative scores are out of five, with five being the best. The weights reflect this buyer’s priorities; they are not universal rules.
| Criterion | Weight | A | B |
|---|---|---|---|
| Total cost | 40% | 3 | 4 |
| Observed quality | 30% | 2 | 5 |
| Delivery reliability | 20% | 5 | 3 |
| Order flexibility | 10% | 4 | 3 |
| Weighted score out of 5 | 100% | 3.20 | 4.00 |
This comparison makes your priorities visible, but it cannot override essential requirements. A supplier that fails a mandatory safety requirement does not become acceptable because its prices are attractive.
When goods arrive, match the purchase order, delivery and invoice before approving payment. Track measures such as deliveries received in full and on the agreed date, using the same definition for every supplier. Include actual defects in your total-cost calculation, rather than relying on an impression of quality.
Negotiate terms both parties can sustain
Prepare your expected volumes and forecasts. Better visibility, consolidated orders or a more suitable delivery frequency can create room to negotiate beyond the price.
Payment terms affect your working capital requirement. Agree them before ordering and honour the agreement. Delaying payments unilaterally is not a sustainable way to finance a business.
Check deposits, minimum order quantities, transport charges and return terms too. A large discount can be expensive if it leaves you holding stock you cannot sell.
Is an early-payment discount worth taking?
A supplier offers a 2% discount on a CHF 10,000 invoice if you pay twenty days earlier. On this simplified calculation, you save CHF 200 and pay CHF 9,800 early.
If financing those twenty days costs 8% a year, the indicative financing cost is 9,800 × 8% × 20 ÷ 365 ≈ CHF 43, excluding fees. That leaves a benefit of about CHF 157 before any other effects. The 8% rate is an illustrative assumption, not a credit offer from Entreprendre.ch.
The calculation is only part of the decision: you must still be able to pay salaries, taxes and other bills. Confirm the amount on which the discount is calculated and account correctly for its effect on the purchase and VAT. A discount that looks attractive on paper is not a reason to leave your business short of cash in the following weeks.
Late payment can also incur interest. Once a debtor is in default, the statutory interest rate is generally 5% a year. A reminder putting the debtor in default is normally required, with exceptions including an agreed fixed payment date. A higher contractual rate may apply (Articles 102 and 104 of the Code of Obligations). If you are struggling to pay, agree a revised payment schedule with the supplier.
Put the important commitments in writing
The contract or purchase order should make the agreement clear. Specify the goods or services, prices, deadlines, acceptance criteria and agreed consequences of defects or delays.
For services, address access to data, confidentiality, ownership of deliverables and how the relationship can end where relevant. Do not assume that agreeing a commercial price automatically settles these issues.
Keep the accepted versions and subsequent changes. An oral change to quantity or scope becomes hard to prove when the invoice arrives.
Keep communication regular
Tell suppliers when your forecasts change and ask them to flag possible delays early. A problem raised before the deadline is usually easier to manage than a missing delivery discovered on the day.
If something is defective, record the facts: item reference, quantity, date, photographs and observed effects. Agree a solution and follow-up instead of letting the discussion become solely an argument about blame.
It remains a commercial relationship. Being a good customer also means providing the information needed, approving work on time and paying on the agreed terms.
Monitor performance and risk
Choose a few measures: on-time deliveries, defect rate, invoice discrepancies and time taken to resolve problems. Review trends at regular intervals.
Returns, rework and interruptions can justify changing suppliers even when the quoted price remains competitive. Equally, a one-off problem that is handled well does not necessarily justify replacing a reliable partner.
For a critical supply, prepare an alternative and test it where possible. Diversifying does not mean adding suppliers unnecessarily; it means reducing a dependency that could disrupt your business.
Three measures that are easy to maintain
| Measure | Calculation and example |
|---|---|
| Deliveries received in full and on time | 18 deliveries meeting both conditions out of 20 expected = 90%. |
| Defective units | 8 confirmed defective units out of 1,000 received = 0.8%. |
| Invoices with discrepancies | 3 invoices needing correction out of 30 received = 10%. |
Set the reporting period and counting rules. For orders delivered in several batches, define what counts as a complete delivery. Use the figures to agree improvements with the supplier.
Follow problems through to a resolution
On receipt, distinguish two different problems. Missing units mean an incomplete delivery: count them, record the difference and request the balance or a credit note. Goods that arrive but are defective raise warranty issues. For an ordinary sale of goods, Article 201 of the Code of Obligations requires inspection as soon as practicable and immediate notice to the seller of defects found; hidden defects must be reported as soon as they are discovered. Keep photographs, the goods-received record and the written complaint.
The ordinary limitation period for defect claims is two years from delivery, but that does not remove the need to notify defects promptly. Contract terms and special rules may affect the position, particularly for construction materials (Article 210). Since 2026, where goods incorporated into immovable property in accordance with their intended use cause a defect in that property, the period for notifying the seller is 60 days; for a hidden defect, it runs from discovery (Article 201(4)). The practical process remains simple: check receipt, keep evidence, notify the supplier and follow the solution through.
Suppose a delivery arrives five units short. Record the difference during the receiving check, keep relevant evidence and inform the supplier with the purchase order reference. Request a specific solution: delivery of the missing goods, replacement or a credit note, as appropriate to the agreement.
Assign someone to follow up and set a review date. Otherwise, purchasing may assume accounting will deduct the amount while accounting waits for a credit note nobody has requested. Keep the dispute visible until it is resolved and the documents agree.
Payment security is also part of supplier management. If an email announces a new IBAN, confirm the change through an independent channel using contact details you already know. Replying to the same message does not verify the sender’s identity.
Track recurring problems too. One delay can be dealt with; three delays involving an essential component call for a review of safety stock, supplier commitments or alternatives. The discussion is more useful when you have precise dates and facts.
Worked example: 100 units invoiced, only 95 delivered
You ordered 100 units at CHF 20 each excluding VAT, for a total of CHF 2,000. The receiving check finds 95 units, but the invoice charges for 100. The difference to resolve is 5 × 20 = CHF 100 excluding VAT.
| Document or action | Expected result |
|---|---|
| Goods-received record | Record the 95 units received, the check date and the shortage of 5 units. |
| Complaint | Give the purchase order reference, missing quantity and request for the remaining goods or a credit note. |
| Supplier agreement | Confirm the solution and date: delivery of 5 units or a credit note for CHF 100 excluding VAT. |
| Payment approval | Record the agreed amount and payment date, including how the disputed amount will be handled. |
| Closing the case | Receive the missing goods or match the credit note to the invoice; check the supplier balance. |
Do not hide the CHF 100 in an accounting difference or assume that deducting it unilaterally resolves the dispute. If a credit note or discount reduces the consideration, adjust the input tax already deducted when recording or settling that correction, as required by Article 41(2) of the VAT Act. The case is complete only when the goods, documents and account balance all tell the same story.
Connect purchasing, inventory and accounting
Match the purchase order, goods received and invoice before payment. Flag missing goods, expected credit notes and disputes so that an unchecked amount is not paid.
Supplier terms should also feed into inventory management and the cash flow budget. A promise of faster delivery improves a forecast only if actual deliveries support it.
At year end, match December deliveries with invoices received in January. Goods or services belonging to the financial year must be accounted for even if the invoice has not arrived, by recognising the appropriate payable or accrued expense. Depending on the purchase, the corresponding entry may be an expense, inventory or a fixed asset. Plan how to process the later invoice without recording the cost twice: our year-end accounts guide explains the process.
Build supplier relationships that support your business
Good supplier management combines clear orders, checks on receipt and controlled payments. It reduces errors while giving suppliers the information they need to meet their commitments.
Our accounting service can help you keep supplier invoices and balances reliable, so purchasing decisions also reflect a clear view of what your business owes.
Frequently asked questions
How many suppliers should a small business have?
It depends on the need and the risk. One main supplier and a credible alternative may be enough for a critical item.
How often should we review supplier relationships?
Match the frequency to purchase volumes and business importance. Key suppliers deserve more frequent reviews than occasional purchases.
Who should check supplier invoices?
The person familiar with the order should confirm that the goods or services were received. The accounting process then checks the amounts and payment. Make each person’s responsibilities explicit.
What should I do if a supplier announces a new IBAN?
Verify the request with a known contact through a channel independent of the message received. Use contact details already on file and obtain approval before changing the payment details. An email that looks authentic is not enough to confirm a bank-account change.
How should I track an expected supplier credit note?
Keep a record containing the original invoice, reason for the claim, amount requested, supplier agreement and follow-up date. When the credit note arrives, match it to the invoice and check the balance, including VAT. Sending a complaint does not mean the problem is resolved.
Sources and references
Romain Prieur is a Swiss certified public accountant and the founder of Entreprendre.ch. With more than ten years of experience in auditing and advising businesses in Switzerland, he helps entrepreneurs with company formation, accounting and tax.
