30 Sep 2020, 15:00 — 5 min read
Nobody wants to get paid late.
Admit it or not, you don’t like to be paid late either. You know for yourself, as a business owner, how it can affect your operations when late payments happen. Can you imagine getting paid late for a service that is completely delivered three months ago?
Paying your vendors and employees can be challenging now, especially with the economic uncertainty due to the COVID-19 pandemic. But no matter how challenging the current situation is, it is your obligation as an entrepreneur to pay them on time; because if you are struggling to preserve your cash flow, they are too.
While it can be tempting to defer payment to keep your business afloat, doing this can impact your business. Here are some consequences when you don’t pay your employees and vendor on time:
Your employees and vendors are vital to the success of your business. Imagine you have a restaurant and you source your key ingredients behind your secret recipe from a local supplier. But because you paid them late, they decided to no longer accept any orders from you. Can you handle the ripple effect that it can cause your business?
On the other hand, in order to sustain your cash flow, you decided to lay off some of your employees and make salary cuts for your performing employees. This can knock off their morale, or worse, leave your company.
Nurturing good relationships with your employees and vendors is essential for your business to succeed. If necessary, pay cuts or delayed payment is inevitable; you have to communicate the issue with them properly in order to keep your relationship healthy.
If you are dealing with cash flow issues, so too are your vendors. By delivering services/products on credit terms, they need to cover the expenses to fulfil orders and ensure that they meet your needs.
With social media, bad press can easily be spread out in just a few seconds. You can be publicly shamed, and the general public can pressure you to make up for your actions.
With limited manpower and the same or increasing market demand, your remaining employees will have to work double-time in order to fulfill the order. By doing this, it can affect their productivity and can cause burnout.
Meanwhile, if you don’t have trusted vendors, the quality of products/services you deliver will be affected too, leading to losing your significant clients or customers.
As the head of the business, it’s a different level of pressure when you don’t know where to get funds to pay your employees and vendors. When your employees can no longer bear the follow-up calls and emails of your vendors, you have to finally face the truth - Where to get funds?
Availing a short-term loan to pay your obligation can be one of your options. This allows you to preserve your cash flow while you can pay your employees and vendors on time.
SeekCap of UBX, a subsidiary of UnionBank, can help you boost your working capital in order to meet your business needs.
Their short-term loan comes with flexible terms (3-6 months term) and avails a loan amount as high as Php 300,000. The interest rate is at 2% per month or 24% per annum with zero processing fees.
These are some of the consequences when you don’t pay your employees and vendors on time, which can be costly for your business. The next time you are looking for additional capital to pay your employees and vendors, know that there is a financing partner like SeekCap that can help boost your capital.
Also read: How to take advantage of short-term loan to jumpstart your business
Image source: Shutterstock
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12 Oct 2020, 15:03