In many plants supplier payments are decided on the day: whoever calls loudest gets paid, a key raw material supplier holds a dispatch because an old bill is overdue, and a small supplier who is protected by law waits longer than anyone else. A weekly payment run built on bill-wise payables replaces that with a plan: every bill with its due date, the cash available for the week, and a priority order agreed in advance. This guide explains how to build one, with a worked example.
Start from bill-wise payables
A supplier’s total balance does not tell you what is due. A bill-wise view lists each purchase bill with its date, credit terms and due date, after debit notes and advances have been adjusted against it. Only then can the payment run pick the right bills – and the supplier’s statement can be matched line by line. Debit notes for rejected material must be knocked off first, or the plant pays for goods it sent back; see from gate entry to debit note and 3-way match and GRNI.
A priority order agreed in advance
- Statutory dues – GST, TDS, PF, ESI and salaries are paid on their dates and are planned outside the supplier run.
- MSME suppliers within the legal window. Payments to registered micro and small enterprises have a maximum period under the MSMED Act, and late payment also affects the tax deduction for the expense – see MSME 43B(h) compliance.
- Overdue bills of critical suppliers – those whose material keeps the line running.
- Job-work vendors holding the plant’s material.
- Everything else by due date.
Write the order down and use it every week. The point is not to delay payments but to make sure that when cash is short, it goes where a delay would cost the most. Review the order once a year with purchase and accounts together, because the list of critical suppliers changes as products and sources change.
Worked example: one week’s payment run
Tejaxo Manufacturing (sample data) has 7,20,000 of bills due or overdue this week and 6,00,000 available for suppliers:
| Bill | Supplier | Amount | Due | Pay now |
|---|---|---|---|---|
| Bill 1 | MSME | 1,40,000 | in 2 days | 1,40,000 |
| Bill 3 | MSME | 90,000 | in 5 days | 90,000 |
| Bill 2 | Raw material | 2,20,000 | 3 days overdue | 2,20,000 |
| Bill 4 | Job work | 1,10,000 | in 6 days | 1,10,000 |
| Bill 5 | Services | 1,60,000 | in 12 days | 40,000 |
The two MSME bills are paid first, then the overdue raw material bill, then the job-work vendor. The services bill, due in 12 days, receives 40,000 now and the balance of 1,20,000 next week, still before its due date. Nothing that matters is paid late, and the conversation with the services supplier happens before the due date, not after. Next week the run starts again from the updated list, with the deferred balance already on it and its due date unchanged.
Linking payments to cash
The cash for the run comes from the short-term cash picture: cash and bank, what customers are due to pay this week and what has to go out. If customers pay late, the run shrinks; if a large receipt arrives, older bills can be cleared. See the owner’s daily dashboard and net liquid position and receivables ageing.
Running it every week
- Fix a day – for example every Thursday – for the payment run, and tell suppliers.
- Adjust first: debit notes, advances and on-account payments against bills.
- List bills due in the next seven days plus anything overdue, with the MSME flag.
- Apply the priority order to the cash available and propose the run.
- Approve – the owner or finance head approves the run as a whole; see approval workflows.
- Pay and record each payment against its bills, so ageing and supplier statements stay correct.
Early-payment discounts
Some suppliers offer a discount for paying before the due date – for example 1% for payment within ten days instead of forty-five. That is a high return on cash held for a few weeks, and a payment run is the right place to decide it: when the week’s cash allows, the bills with an early-payment discount move up the list. Record the discount on the bill so the run shows it, and check after payment that the supplier’s credit note or reduced invoice actually reflects it.
Telling suppliers what was paid
A payment without an explanation creates its own work: the supplier’s accounts team cannot tell which bills it covers, applies it to the oldest invoice by default and sends a statement that does not match. A short payment advice with each run – bills paid, debit notes adjusted, TDS deducted and the net amount – prevents that. It also reduces the number of calls asking when a bill will be paid, because suppliers can see the plan.
Supplier statements and disputes
Once a quarter, match each major supplier’s statement with the bill-wise ledger. Differences are usually a debit note the supplier has not accepted, a bill booked twice, a payment applied to the wrong bill, or a bill missing because it was never received. Resolving them keeps the next payment run clean and avoids paying the same amount twice.
What a payment run report should show
- Bills by supplier with due date, days to due or overdue, MSME flag and amount.
- Debit notes and advances already adjusted, so the net payable is clear.
- The proposed payment per bill and the total against the cash available.
- Bills deliberately deferred, with the reason.
How Tejaxo ERP handles it
Tejaxo ERP keeps payables bill by bill: purchase vouchers are 3-way matched to the order and receipt, debit notes follow purchase returns, and reference adjustment knocks off pending bills against advances, on-account payments and credit or debit notes – manually or by FIFO auto adjust – so ageing is correct. The Owner’s Cockpit shows payables bill-wise due next to cash and bank and the net liquid position, finance reports include MSME due tracking and 43B(h) reporting, and import suppliers are tracked in foreign currency with forex gain or loss on payment – see import purchase from PO to payment.
Common mistakes
- Paying on account, so bills stay open and ageing shows them as overdue.
- Forgetting debit notes, so rejected material is paid for.
- Treating MSME suppliers like everyone else – their window is set by law, not by negotiation.
- Ad hoc payments between runs that skip the priority order.
- No record of deferred bills, so the same supplier is surprised every week.
Next step
See payables bill-wise due, reference adjustment and the cockpit’s cash tiles on your own suppliers in a free demo.
Frequently asked questions
What is a supplier payment run?
A planned, usually weekly, batch of supplier payments chosen from bill-wise payables by due date and an agreed priority order, approved together and recorded against the bills paid.
In what order should suppliers be paid when cash is short?
Statutory dues first, then MSME suppliers within their legal window, then overdue bills of critical suppliers, then job-work vendors, then everything else by due date.
Why should payables be tracked bill-wise?
So each payment is applied to specific bills, debit notes and advances are adjusted, ageing is correct and supplier statements can be matched line by line.
What is the MSME payment window?
Payments to registered micro and small enterprises have a maximum period under the MSMED Act, and late payment can affect the tax deduction for the expense under section 43B(h). Confirm details with your CA.
How often should supplier statements be reconciled?
At least quarterly for major suppliers, to catch unaccepted debit notes, duplicate bills, misapplied payments and missing bills.
Does Tejaxo ERP show payables due bill by bill?
Yes. It keeps payables bill-wise with reference adjustment, shows payables bill-wise due on the Owner’s Cockpit, and includes MSME due tracking and 43B(h) reporting.
