Managing your suppliers and debts: the method to stop losing money on your purchases

There's a lot of talk about selling more. There's much less talk about buying better. Yet in a shop or a distribution SME, purchases often represent the company's biggest expense, well ahead of salaries and rent. Every franc lost on purchasing is a franc of margin lost, and it's never recovered on the sale.

And there are many ways to lose money on purchasing: an incomplete delivery accepted without counting, an invoice paid twice, a price increase that goes unnoticed, a discount promised but never applied, a forgotten due date that damages the relationship with a key supplier, or an invoice without an NIU that costs you the VAT deduction.

This guide gives you a complete method to take back control of your purchasing: organise your suppliers, secure every purchase from order to payment, manage your debts and due dates, negotiate with figures, and avoid costly tax mistakes.

The 7 money leaks on the purchasing side

1. The incomplete delivery. 50 cases invoiced, 47 delivered. If nobody counts, the difference is lost.
2. The invoice paid twice. An invoice received by WhatsApp, a paper copy handed over by the delivery person, a supplier statement: without tracking, the same debt sometimes gets paid twice.
3. The silent price increase. The supplier raises their price, you keep selling at the same price. Your margin melts away without anyone noticing.
4. The forgotten discount. A volume discount or a goodwill gesture negotiated verbally, but never applied on the invoice.
5. Late penalties and a damaged relationship. A forgotten due date, and a supplier reduces your credit, demands cash payment, or serves you after the others during a shortage.
6. The early-payment discount never taken. A supplier offers a discount for prompt payment, but nobody knows which invoices qualify.
7. Non-deductible VAT. A supplier invoice without an NIU, or a large purchase paid in cash, and the VAT on that purchase can no longer be deducted.

Each of these leaks seems small. Added up over a year, they often amount to a considerable sum. And they all have the same cause: a purchasing process that isn't tracked from end to end.

Rule 1: a clean supplier database

It all starts with one profile per supplier. The useful information:

The NIU: the detail to check before anything else

The Cameroonian tax administration is clear on this point: expenses recorded on an invoice that doesn't show the supplier's NIU are not deductible, and the presence of the NIU is even the precondition for any examination of deductibility (implementing circular for the 2012 finance law). A supplier who doesn't provide an invoice with their NIU therefore makes you pay more tax, even if their price looks attractive.

The right reflex: record each supplier's NIU in their profile, and check it on every invoice received. Software can block or flag a supplier invoice entered without an NIU.

The details an invoice must include are covered in our article Compliant invoices in Cameroon: mandatory details (NIU, VAT) and the mistakes that lead to a tax reassessment. This guide also helps you check the invoices you receive.

Rule 2: the order, receipt, invoice, payment process

This is the heart of the method. Every purchase follows four steps, and each step leaves a trace:

Purchase order → Goods receipt → Supplier invoice → Payment

Step 1: the purchase order

Every order, even one placed by phone or WhatsApp, is recorded in the software: supplier, items, quantities, negotiated prices, discounts, expected delivery date. It's your reference. Without it, you won't be able to check anything afterwards.

Bonus: if your software manages reorder points, it directly suggests the list of items to order, as explained in our guide Stock management for shops in Cameroon.

Step 2: receiving the goods

On delivery, the storekeeper counts in the presence of the delivery person and enters the quantities actually received, based on the purchase order. The software immediately shows the discrepancies: missing items, different quantities, damaged items. Discrepancies are noted on the delivery note, signed by both parties. The stock is updated with what was actually received.

Step 3: checking the invoice

When the supplier's invoice arrives, it's compared with the purchase order and the goods receipt. This is called three-way matching:

Any difference is settled before payment: a credit note requested from the supplier, a corrected invoice, or payment limited to the justified amount. After payment, recovering an overpayment is always harder.

Step 4: payment

The validated invoice goes into the supplier debt payment schedule, with its payment deadline. The payment is recorded with its method (bank transfer, cheque, Mobile Money, cash) and reference, then linked to the invoice. The debt is settled. No invoice can be paid twice: the software knows it's already been paid.

Rule 3: monitor your purchase prices

A purchase price increase that isn't passed on is one of the most discreet ways to lose money.

Let's go back to the example from our dashboards article: an item bought for 10,000 FCFA and sold for 12,500 FCFA generates a margin of 2,500 FCFA, i.e. a margin rate on sales of 20%. If the supplier moves to 11,000 FCFA and you keep your selling price, the margin drops to 1,500 FCFA, i.e. a margin rate of 12%. You sell as much, you work as hard, and you earn 40% less on that item.

Management software that records the prices on each supplier invoice can:

• flag any price increase compared with the last purchase or the negotiated price;
• recalculate the item's margin and alert you if it falls below a threshold;
• suggest adjusting the selling price.

The margin and margin rate calculations are explained in our article Sales tracking: the 5 dashboards every manager should check every week.

Rule 4: manage your supplier debts

Paying your suppliers on time is a matter of reputation. Paying at the right time is a matter of cash flow. Both are managed with a payment schedule.

The payment schedule

Every week, the software displays:

• invoices that are overdue and unpaid;
• invoices to be paid in the next 7 and 15 days;
• invoices that qualify for an early-payment discount if paid quickly;
• the total debt per supplier.

Set against your expected receipts (the cash flow dashboard), this schedule lets you anticipate pressure points instead of suffering them.

Average supplier payment time

Average supplier payment time ≈ (supplier debts ÷ purchases including tax for the period) × number of days

Example: 4,500,000 FCFA of supplier debts for 9,000,000 FCFA of purchases including tax over 90 days → an average payment time of 45 days.

Compare it with your customers' average payment time. If your customers pay you in 30 days and you pay your suppliers in 45 days, your business partly finances your cash flow. If it's the other way round, you're financing your customers with your own money: that's often where cash flow pressure arises in growing SMEs.

Payment priorities

When cash is tight, not all suppliers are equal. A simple rule:

1. Strategic suppliers: those without whom you can't sell (your A items), or who are hard to replace.
2. Tax and social security payments, which generate penalties.
3. Invoices with a worthwhile early-payment discount.
4. The others, letting the supplier know and proposing a firm date.

A supplier who is warned in advance and offered a realistic payment plan almost always reacts better than one who discovers the delay when chasing payment.

Rule 5: take advantage of early-payment discounts (or not)

Some suppliers offer a discount for early payment. Is it worthwhile? Let's do the maths.

An invoice of 2,000,000 FCFA, payable in 60 days, with a 2% discount if you pay within 10 days:

• Immediate gain: 40,000 FCFA.
• In return, you bring the payment forward by 50 days.
• Annualised, this discount is equivalent to a return of about 15% (2 ÷ 98 × 365 ÷ 50).

If you have cash available, it's often far more worthwhile than leaving it idle. On the other hand, if you need to borrow or use an expensive overdraft to pay earlier, compare with the cost of that financing.

Software that knows each supplier's terms automatically flags invoices with a discount and the possible gain.

Rule 6: pay traceably

For your purchases, the payment method also has tax consequences. The DGI excludes VAT deduction when the purchase was paid in cash above 100,000 FCFA (DGI VAT factsheet). On a purchase of 600,000 FCFA excluding tax, that's 115,500 FCFA of VAT lost.

For large purchases, favour bank transfer, cheque or Mobile Money, and keep proof of payment, linked to the invoice in the software. Software can alert you when a cash payment exceeds this threshold. VAT treatment of your purchases is detailed in our article VAT and filing on DGI Fiscalis, and paying your suppliers by Mobile Money in our guide Mobile Money: integrating MTN MoMo and Orange Money into your management.

⚠️ Tax rules change with every finance law. Have your accountant confirm the treatment of your purchases and payment methods.

Rule 7: evaluate and negotiate with figures

A supplier isn't judged on price alone. A cheaper supplier who delivers late every other time costs you stock-outs, and therefore lost sales.

The supplier evaluation sheet

With a tracked purchasing process, the software automatically calculates, for each supplier:

• Purchase volume over the year.
• Price trends on the main items.
• On-time delivery: deliveries on time or late.
• Delivery accuracy: exact quantities, damaged items, errors.
• Invoice accuracy: pricing errors, missing NIU, duplicates.

Negotiating with these figures

With this data, negotiation changes in nature. You no longer arrive with an impression ("you're a bit expensive"), but with facts:

"This year, we bought 18 million FCFA from you. Over the last 6 months, three deliveries arrived incomplete and your prices went up twice. We'd like to review the terms: payment at 45 days, a volume discount above 2 million per order, and a commitment on lead times."

The levers to negotiate aren't limited to price: payment terms, volume discounts, early-payment discounts, delivery included, taking back unsold goods, priority in case of shortage.

Avoiding dependence

If a single supplier accounts for most of your purchases of a key item, you're vulnerable: a stock-out on their side, a sudden increase, a change in terms. For your A items, identify at least one alternative source, even if you only use it occasionally.

Features to demand from your software

• ✅ Supplier profile with NIU, payment terms, early-payment discount, lead times
• ✅ Purchase orders with negotiated prices and discounts
• ✅ Goods receipt based on the order, with discrepancies displayed
• ✅ Matching of order, receipt and invoice
• ✅ Duplicate checking and an alert for invoices without an NIU
• ✅ Price increase alerts and margin recalculation
• ✅ Debt payment schedule with early-payment discounts flagged
• ✅ Multiple payment methods (bank transfer, cheque, Mobile Money), linked to invoices
• ✅ Alert on cash payments above 100,000 FCFA
• ✅ Supplier evaluation: lead times, accuracy, price trends
• ✅ Purchase journal exportable for the VAT return and the accountant

To compare the available solutions, see our comparison of the 7 best sales management software in Cameroon. If your organisation is unusual (imports, several depots, centralised purchasing for several shops), our article custom or standard software: which should you choose? will help you decide.

The 4-week action plan

Week 1: the database. Create a profile for each of your active suppliers, with their NIU and terms. Ask for any missing information.

Week 2: the debts. Record all unpaid supplier invoices. You get your first payment schedule, and often a surprise.

Week 3: the process. From now on, every purchase goes through a purchase order, and every delivery is checked on receipt.

Week 4: the controls. Match each new invoice with its order and receipt before payment. Start the weekly review of the payment schedule.

Then: every Monday, look at the payment schedule and price alerts as part of your management ritual. Once a year, evaluate your main suppliers before renegotiating.

FAQ

Do you really need a purchase order for every purchase? For all purchases of goods, yes: it's the only reference that lets you check the delivery and the invoice. With software, it takes a minute to create, often from a restocking list suggested automatically.

What if a supplier refuses to put their NIU on their invoices? Explain that without an NIU, you can't deduct the expense or the VAT. If they refuse, factor this tax cost into your price comparison: their offer is probably less attractive than it looks. Your accountant can advise you on what to do.

How do you avoid paying the same invoice twice? Record each supplier invoice in the software as soon as it's received, with its number, and link each payment to an invoice. The software flags duplicates and doesn't allow an already settled invoice to be paid.

Is it better to pay suppliers as late as possible? Pay on the agreed due date, not before (unless there's a worthwhile discount), and never after without warning. Paying late without warning damages the relationship and can cost you tougher terms. Paying too early without anything in return ties up your cash unnecessarily.

Can my management software prepare the purchase journal for my VAT return? Yes, if supplier invoices are recorded in it with the NIU and VAT. The purchase journal and the input VAT summary can then be exported in a few clicks for your accountant.

Conclusion: every franc saved on purchasing is a franc of margin

Purchasing is where an SME can lose a lot of money without realising it, and recover a lot without selling a single extra item. A clean supplier database, a tracked order-receipt-invoice-payment process, a payment schedule reviewed every week, and negotiations backed by figures: that's all it takes to turn your purchasing into a source of margin rather than a source of leaks.

At Alivaon, in Douala, we build supplier and purchasing management into our custom sales management software: purchase orders, checked goods receipts, invoice matching, price alerts, a debt payment schedule and supplier evaluation. All linked to your stock management, your DGI-compliant invoicing and your till/POS.

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