This part of doing your restaurant business financial projections is very easy. All you have to determine is how many of your vendors you will pay over time rather than in cash and how much time you can wait.
Although some restaurant owners like to pay everyone in cash on delivery that strategy is not good for several reasons. For one thing, if you can get your vendors to take payment at a later date it means you can sell food you haven’t even paid for yet, meaning bigger profits and a bigger cushion in case things slow down or you need money for growth.
For another thing, establishing good credit with your suppliers can help a lot when you need to finance something you can’t pay for all at once such as a remodel or equipment or a second location.
The only time you don’t want to extend payment is if you are going to have to pay a lot of interest on the money plus maybe late fees and other penalties. Most restaurant business owners, once established, can get net thirty terms from most vendors, meaning that you have thirty days to pay the bill without being charged interest.
There will always be a few small vendors you have to pay upfront, such as the grease trap cleaner, the pest control guy and any repairs or services, but most of your big bills should come with terms.
A safe estimate is fifteen to twenty percent paid upfront and eighty or eighty five percent paid in thirty days. Few vendors will wait longer than thirty days without charging but if you get one take it!