Spending with a supplier? That's procurement.
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The formal moment when one party agrees to the other's offer, creating a binding contract.
Tracked through signed agreements, signed POs or documented acceptance of deliverables.
Saying "yes" to a quote in writing is acceptance. So is paying the deposit. Be careful which "yes" you give.
Checking that what the supplier delivered actually does what they promised, before you sign off.
Formal test plans with pass/fail criteria, run by the buyer or an independent party.
Before final payment on any significant buy, run it through its paces. Document what worked. If something fails, document that too. It's leverage.
Money your business owes to suppliers for invoices you've received but not paid yet.
A formal ledger function with ageing reports, supplier statements and days-payable-outstanding targets tracked monthly.
Your unpaid bills. The list of who's waiting on you. Useful to time payments to your cash flow, not the supplier's.
Money owed to your business by customers for invoices you've sent but not been paid for.
Tracked by ageing buckets at 30, 60 and 90 days, with credit control and collections teams.
Your unpaid sales. The bigger this gets, the harder cash flow becomes. Chase it before you chase a bank loan.
A supplier's written confirmation that they've received your order and accepted it.
Matched against the PO and goods receipt in a three-way match before payment.
If a supplier doesn't reply to your PO email, that's not their acceptance. Get the "yes, received, on its way" in writing.
An older term for events outside human control, like natural disasters.
Now usually folded into force majeure clauses.
Don't rely on the words "act of God" in your contract. Make sure the list of covered events is written out.
Setting the first number in a negotiation to shape where it lands.
Studied behaviour. First credible number usually pulls the outcome toward it.
If you go first with a number, make it lower than you'd settle for. If they go first with a high number, don't react. Ignore it and reset.
The dollar amount above which a purchase needs extra sign-off.
Tied to the delegations register and role seniority.
Set one for yourself. "Anything over 5,000 dollars sleeps overnight before I sign." The discipline pays for itself.
The written record of who decided what, when, and why.
Required for probity, governance and external audit.
Save your emails. Save your quotes. Save your decision notes. If a deal goes wrong, the audit trail is your defence.
A clause that rolls the contract over automatically unless you cancel by a set date.
Managed through a contract register with renewal alerts.
Diary it. Six weeks before the renewal date, decide if you want to stay or walk. Most software contracts auto-renew silently.
Going back and forth on price, terms or scope until both sides agree.
One of several negotiation styles. Often distinguished from interest-based negotiation.
Bargaining is what most SMBs do. Effective for one-off buys. Ineffective for long-term relationships where the supplier remembers being squeezed.
Best Alternative to a Negotiated Agreement. What you'll do if this deal falls over.
Set before the negotiation starts. The stronger your BATNA, the stronger your hand.
What's your plan B? "I'll stay with my current supplier" is a BATNA. "I'll do it myself for a month" is a BATNA. Know yours before you walk in.
A standoff between buyer and supplier where each side keeps pushing their own standard terms.
Resolved through master agreements that pre-agree which terms govern.
It usually ends with whoever sends the last form winning. Read what's at the top of every quote and order confirmation, not just the price.
The supplier's final price and terms after negotiation.
Issued under formal rules. Used to break a tie between shortlisted bidders.
"Give me your best price" works the same way. Use it once, not five times. Suppliers stop sharpening their pencil if you keep asking.
Suppliers secretly arranging who wins a tender, and at what price, before bids are even submitted.
A specific form of cartel conduct, illegal and audited for in formal procurement.
Hard to spot at SMB scale. The defence is the same: get genuine quotes, never share other quotes with bidders.
Standard contract wording that appears in almost every contract, often at the back.
Includes governing law, notices, assignment, severability and entire-agreement clauses.
The bit most owners skip. Read it once per supplier, even if it's "the boring part." It's where the surprises hide.
When one party fails to do what the contract said they would.
Categorised by severity (material vs minor) and triggers escalation or termination rights.
Document every miss in writing as it happens. If the relationship breaks down, your written record is your case.
What a supplier is able to do. Their skills, expertise, equipment and experience.
Assessed through pre-qualification questionnaires and reference checks.
Don't confuse capability with capacity. A supplier can be capable but too busy. Check both.
How much a supplier can deliver, at what speed, with their current resources.
A risk factor in supplier selection. Constraints are mapped in supply planning.
Ask "what else are you working on?" before signing. A capable supplier with no capacity for you is still a bad supplier.
Money spent on long-lasting assets like equipment or fit-outs, rather than day-to-day running costs.
Has its own budget, approval process and depreciation schedule. Distinct from operating expenditure (opex).
One-off big buys. A new oven. A van. A laptop fleet. Different from rent and wages because you keep the asset.
A group of suppliers who secretly agree to fix prices, share markets, or rig bids together.
Illegal under the Competition and Consumer Act 2010 (Cth). Reported to the ACCC if suspected.
If your three quotes come back suspiciously close in price, especially in a small local market, that's a flag. Worth investigating.
A question asked of a supplier during evaluation to make sure you've understood their response.
Recorded and shared with all bidders where required by probity.
If their quote is ambiguous, ask. Don't guess. Don't sign anything you're not sure about.
A written set of rules about how a business expects its people and suppliers to behave.
Published, signed by suppliers, and enforced through audits.
A one-page code covering honesty, no kickbacks and declared conflicts is enough at SMB scale. Worth writing down so it's not just "what you'd assume."
A secret agreement between parties who should be competing, to manipulate the outcome.
Detected through bid pattern analysis. Reported to competition authorities.
Two suppliers acting like rivals on the surface but coordinating behind the scenes. If you sense it, walk away from both.
Meeting the rules, laws and standards that apply to your business and your suppliers.
Tracked through compliance registers, audits and supplier attestations.
For SMBs the core list is short: tax, super, fair work, privacy, consumer law. Suppliers you use need to meet the same standards or you carry the risk.
The risk that comes from depending heavily on one supplier, one customer, or one input.
Mapped at category level. Triggers dual-sourcing or contingency planning.
If one supplier going down would close your business for a week, that's concentration risk. Find at least one backup, even if you never use them.
A clause that stops the supplier sharing your private information.
Survives termination. Often paired with an NDA at the start of the relationship.
Your customer list, your pricing, your numbers. None of that should leave the supplier's office. Make it a clause.
A clause that lets the supplier increase prices in line with CPI each year.
Often capped or replaced with a more relevant index.
CPI measures the cost of consumer goods. It usually has nothing to do with the supplier's costs. Push for a real cap or a more relevant index.
An expectation that the supplier finds ways to do things better, cheaper or faster over time.
Built into long-term contracts as a clause or annual target.
Ask once a year: "What have you learned about our business that means you can do something differently?" The best suppliers love this question.
A legal agreement that says who is doing what, for how much, for how long, and what happens when something goes wrong.
Drafted, reviewed and signed under delegated authority. Stored in a contract register.
Read it. All of it. Before you sign it. Not after. The fight you avoid by reading takes a fraction of the time of the fight you have because you didn't.
The day-to-day work of making sure the supplier is doing what the contract says.
Owned by a named contract manager. Tracked in a contract management system.
Save the contract somewhere you can find it. Read it once a year. Most SMB contracts are signed and never opened again.
A central list of every contract you have, who it's with, when it expires and what it's worth.
Owned by procurement or legal. Drives renewals and risk reporting.
A spreadsheet works. Columns: supplier, what they do, monthly cost, renewal date, notes. You'd be surprised what you find.
The supplier charges you their cost plus an agreed margin.
Transparent. Works well when scope is uncertain.
Useful when nobody knows the exact effort. Cap the margin in writing or the cost can drift.
A reply to an offer that changes one or more of its terms. Legally a rejection of the original.
Common in formal negotiations. Each counter resets the clock.
"I'll do it for 5,000 dollars, not 6,000" is a counter offer. The supplier's original quote is now off the table. Important if you change your mind later.
A check that a supplier can keep your data and systems safe.
Tests aligned to standards like ISO 27001 or the Essential Eight.
Ask three questions. Where is my data stored? Who can see it? What happens if there's a breach?
The written record of all conflicts of interest and how they're being managed.
Maintained by procurement or governance. Audited.
At SMB scale, a single line in an email saying "I should declare that..." is your register. Keep it. Date it. Save it.
The rules about who can sign what.
Documented in a delegations register. Tied to value thresholds and contract types.
In an SMB it's usually just you. The risk is staff signing contracts you never approved. Tell them to forward everything before signing.
The agreed steps for sorting out a fight if one breaks out.
Usually in tiers: talk, mediation, arbitration, then court.
Avoid clauses that send you overseas. Try to land on Aussie mediation. It's cheaper and faster.
The deeper checks you do on a supplier before signing.
Financial, legal, operational, cyber, ESG and modern slavery checks.
At minimum, look them up on ASIC, check their reviews, talk to two of their existing clients, and check they're insured.
Short for Environmental, Social and Governance. The non-money standards a supplier holds itself to.
Checked through forms, badges and public reports. More and more often, a must.
If your customers care about green or fair, your suppliers need to as well. Ask for proof, not slogans.
The standards you use to compare and choose suppliers.
Documented and signed off before bids are received.
Decide what good looks like before the quotes land. Otherwise the supplier with the slickest deck wins.
How responses will be scored and by whom.
Locked in before responses are opened. Critical for probity.
Write down how you'll choose before you see the quotes. Otherwise the prettiest pitch wins.
The terms for ending the contract and what happens next.
Covers transition, data return, intellectual property and ongoing obligations.
How easily can you leave, and what do you get to take with you? A good exit clause is worth more than a small price discount.
Actively chasing a late or at-risk order to get it back on track.
A defined role or function in procurement, especially in projects.
The polite version is "checking in." Do it before the deadline, not after. By the time it's late, options shrink.
A first-stage process where suppliers say "yes, we'd like to bid."
Used to shortlist who gets invited to the full tender.
If a supplier wants to sound official, they call their first email an EOI. Treat it as a screening step, nothing more.
The classic procurement checklist: right product, right quantity, right place, right time, right cost.
Used as a foundational training framework and as a sanity check on category strategies.
Five questions to ask before any purchase. If you can't answer all five, you're not ready to buy.
A single agreed price for a defined piece of work.
Pushes delivery risk to the supplier. Requires a tight scope.
Best when you know exactly what you want. If the scope is fuzzy, fixed price hurts both sides.
A clause that excuses both parties from performing the contract when something extraordinary stops them.
Rewritten heavily after COVID-19. Definitions of triggering events matter.
Floods, fires, pandemics, war. Read the list. If your business is climate-exposed, this clause is more important than it looks.
The standard rules of the contract.
Often a battle of forms with the supplier's terms. The buyer's terms should win.
If a supplier sends you their terms, send yours back. Negotiate from the middle. Don't accept theirs by silence.
Items, meals, tickets or trips offered by suppliers.
Bound by a written policy, declared above set thresholds, and sometimes banned outright.
A long lunch from a supplier is fine once. A weekend away from a supplier you're about to renew with isn't. Use common sense and write it down.
The system of decisions, controls and accountability that runs the business.
Formal policies, registers, committees and reporting lines.
For SMBs it's mostly written habits. Who signs what. How decisions are recorded. What gets reviewed when. Light governance still beats none.
Which country's or state's law applies to the contract.
Critical for international suppliers. Affects dispute strategy.
Get the law of your state. Don't let a small overseas supplier impose theirs on you.
A contract term that's not written down but applies anyway, by law or by common practice.
Includes statutory implied terms under Australian Consumer Law and industry custom.
Some protections are built in even if the contract is silent. Goods must be fit for purpose. Services must be done with reasonable care. Know your minimums.
A promise by one party to cover the other's losses if a specific bad thing happens.
Heavily negotiated. Carve-outs and caps matter as much as the headline clause.
If the supplier causes a problem (a data breach, a copyright issue, a personal injury), the indemnity says they'll cover it. Get one. Read it.
Buying from Aboriginal and Torres Strait Islander businesses.
Backed by set targets in federal and state buying rules.
Supply Nation is the Aussie directory to start with. Worth doing on its own merits, and useful if you sell to government.
The list of insurance a supplier holds and what each one covers.
A must in contracts. Checked against current proof of cover.
Ask for a copy of their public liability cover. Read the end date. Save it to a folder.
The rights over what someone creates: software, content, designs, brands.
Allocated in the contract. Default position varies by jurisdiction and engagement type.
If you pay a designer for a logo, does the logo belong to you, or them? Put it in writing. Pre-emptively, every time.
A signal from a buyer that they're open to receiving offers, without forming a binding contract themselves.
A critical legal distinction in tender documents. Avoids accidental contract formation.
When you ask for a quote, you're not promising to buy. The quote is the offer. Your acceptance creates the contract. Useful to know if a supplier acts like the quote alone closed the deal.
A measurable target that tells you whether the supplier is doing what they said they'd do.
Tied to SLAs, reviewed in supplier governance meetings.
Pick three KPIs you'll actually check. Five is too many. Zero is most SMB contracts.
How long it takes from placing an order to receiving the goods or service.
A planning input for inventory, production and project timelines. Pushed back to suppliers as a service level.
If your supplier says "two weeks," add a buffer. Lead times slip more often than not, and so do your customer promises.
A short review of what worked and what didn't, captured at the end of a project or contract.
Stored centrally. Feeds into category strategy and supplier ratings.
Ten minutes after a job ends. What went well, what didn't, what would I do differently next time. Save it. Read it before the next buy.
A bank's promise to pay the supplier on your behalf once certain conditions are met.
Standard in international trade. Manages payment risk for both sides.
You probably won't use one for local deals. Useful to know if you're importing or exporting and a bank gets involved.
A written statement that you intend to do a deal, used before the full contract is signed.
Often non-binding except for specific clauses like confidentiality. Used to start work in good faith.
Useful when you need work to start, and the contract isn't ready. Risky if the supplier treats it as a green light for everything.
A cap on how much one side can be made to pay if things go wrong.
Usually capped at fees paid in the previous 12 months. Carve-outs for IP, confidentiality and gross negligence.
If their cap is 100 dollars on a 50,000-dollar problem, that's a problem. Push back on the cap.
A pre-agreed amount the supplier pays if they fail to deliver on time or to spec.
Capped at a percentage of contract value. Distinct from a penalty.
Hard to enforce at SMB scale, but worth having for high-stakes deliverables. A late delivery costs you. Make it cost them too.
How much of a supplier's offering is made or delivered locally.
Mandatory in government procurement and large infrastructure.
If "buy local" matters to your customers, write it into your supplier choices. Ask, document and price it in.
One total fixed price for the whole job, agreed up front.
Pushes scope risk to the supplier. Requires a tight specification.
Best when you know exactly what you're buying. If the scope is vague, lump sum hides the risks until they show up as variations.
A supplier produces only after they receive your order, not in advance.
Common in custom manufacturing. Longer lead times, lower stockholding risk.
You wait longer but pay less in deposits. Useful for one-off jobs. Bad for "I need it tomorrow" situations.
A supplier produces in advance and sells from stock when you order.
Common for high-volume standard goods. Shorter lead times, supplier carries the inventory cost.
You get it faster, and you're paying part of the supplier's stockholding cost in the price.
Pass-or-fail requirements a supplier must meet to be considered.
"Must hold X insurance." "Must have done Y before." No mandatory, no shortlist.
Your non-negotiables. If a supplier can't tick them, the relationship is over before it starts.
An umbrella contract that sets the rules for all the work a supplier does for you.
Negotiated once. Individual SOWs sit underneath it.
Worth using even for small jobs. Sign once. Use the same terms for every piece of work that follows.
A false statement made by one party that gets the other to enter the contract.
Distinct categories (fraudulent, negligent, innocent) with different legal remedies.
If a supplier promised you something during the sales call that turns out not to be true, you may have a misrepresentation case. Document the promises.
A public statement of what a business is doing to prevent forced labour in its supply chain.
Required under the Modern Slavery Act 2018 (Cth) for entities over set revenue thresholds.
You're probably below the threshold. Customers and larger partners may still ask. Knowing your top suppliers and where they operate is the start.
The conversation where you agree the price, terms and obligations on both sides.
Run by trained category or commercial leads against a defined negotiation plan.
Most SMB owners under-negotiate. Suppliers expect you to push back. They've priced in the room to do so.
A short contract that stops both sides sharing private info.
Signed before bid data, IP or money details get shared.
Use one before you share your numbers with a new supplier. Free templates work. Just read them first.
Transferring a contract from one party to another, with everyone's agreement.
Used in M&A and corporate restructures.
If your supplier gets bought, their contract with you may be novated to the new owner. Read the clause that allows or blocks this.
A clear proposal to enter a contract on stated terms. Acceptance of an offer creates the contract.
A defined legal step in contract formation. Distinguished from invitations to treat and counter offers.
A supplier's quote with a price and a scope is usually an offer. Your "yes" closes the deal. Until you say yes, you can change your mind.
A pricing arrangement where the supplier shows you their actual costs and margins.
Common in long-term partnerships and outsourced services.
Rare in SMB. You can still ask a supplier to break their quote into parts. You'll learn a lot.
A tender any supplier can reply to.
Most competition. More admin work to run.
Public, visible, slow. Not how most SMBs buy.
A pre-approved list of suppliers a buyer can use without re-running a full procurement.
Saves time and reduces risk. Common in government and large corporates.
Your three trusted contractors are your panel. The advantage is speed when you need someone fast.
The rule of thumb that says 80 percent of results come from 20 percent of inputs.
Used in spend analytics to focus category management on the top 20 percent of suppliers driving 80 percent of spend.
Twenty percent of your suppliers probably get 80 percent of your money. Find that 20 percent first. That's where the savings live.
When and how you have to pay.
Negotiated in line with working capital policy. Net 30, Net 60, or progress payments.
Standard for SMB is 14 to 30 days. Suppliers often ask for less. You can usually negotiate.
A contract clause that punishes one side for breaching it. Unenforceable in many jurisdictions if it's punitive rather than compensatory.
Often rewritten as liquidated damages to survive legal challenge.
If a clause looks like punishment rather than fair compensation for loss, it may not hold up. Worth a quick legal sense-check on big contracts.
A guarantee, often from a bank or insurer, that pays out if the supplier fails to deliver.
Standard in construction and large capital projects. Held until milestones are met.
Rare in SMB unless you're a supplier to government. As a buyer, useful for large one-off jobs where supplier failure would hurt.
A short list of suppliers the business chooses to work with by default.
Managed by category teams. Reviewed regularly.
Worth writing yours down. It saves time when you're under pressure and stops you defaulting to whoever Googled fastest.
An early-stage check that a supplier meets your minimum requirements.
Filters out unsuitable bidders before the full process starts.
Quick screening questions on the first call save a long second meeting.
A clause that says how and when prices can change over the life of the contract.
Tied to specific indices or input costs. Capped where possible.
The clause that costs SMBs the most money. A blanket "CPI per year" is lazy. Negotiate the cap or the index.
A short plan that sets out how the procurement will run, who's involved, and what the timing looks like.
Approved before going to market. Used to manage the process and risk.
One page. "Here's what we're buying, here's the criteria, here are the suppliers, here's when we decide." Saves weeks of drift.
The written rules for how the business buys things.
Covers thresholds, approvals, suppliers, conflicts and exceptions.
Even a two-page policy helps. "Over 1,000 dollars, we get three quotes. Over 10,000, two of us approve."
A document that authorises a specific purchase under existing terms.
Raised against an approved budget. Matched to invoice and goods receipt before payment.
At SMB scale, an email saying "please proceed with the quote dated X for the amount of Y" is a PO. Keep a copy.
A regular meeting between buyer and supplier to review performance and what's coming up.
Run against an agreed agenda: KPIs, issues, roadmap, risks.
For your most important supplier, do a short one twice a year. Five questions. Are we getting what we agreed? What's changed? What's next?
Money the supplier pays back to you after you've spent a certain amount.
Tracked through procurement finance. Reconciled annually.
Easier to manage than discounts off invoices. Track it in a note in your calendar so you actually claim it.
Stepping out of a decision because you have a conflict.
The conflicted person leaves the room, the panel, or the approval chain.
If you genuinely can't be objective about a supplier, ask someone else to make the call. Then live with their answer.
Calls to people who've worked with the supplier before.
Formal process. Same questions to every reference. References offered by the supplier are a starting point only.
Don't just call the references they hand you. Find one yourself. Their honest answer is worth more than a polished sales deck.
A written plan that says how the supplier will fix a performance issue and by when.
Signed by both parties. Tracked to completion.
Short email. "Issue, fix, by when, by whom." Hold the supplier to it. Walk if they miss the deadline twice.
Going back into the terms of an existing contract to change them.
Triggered by market shifts, performance issues or strategic change.
You can ask any time. "Things have changed for us; can we revisit the price or the terms?" Most suppliers would rather renegotiate than lose you.
The decision to extend a contract for another term.
Triggered by a renewal calendar. Often the cheapest moment to renegotiate.
Don't auto-renew. Treat renewal like a new buy. Get one alternative quote even if you plan to stay.
A detailed ask where suppliers propose how they'd solve your problem, not just what it costs.
Used for complex, higher-value or strategic buys. Scored on weighted criteria.
Useful when the answer isn't obvious. Ask suppliers to show you their approach, not just their price.
A short, priced ask for a clearly defined product or service.
Used for lower-value, well-defined buys. Compared on price and a few set criteria.
"Here's what I need, what will it cost?" Send it to three suppliers. Compare apples to apples.
A formal, often public process where suppliers bid against a strict specification.
Common in government and regulated industries. Bound by probity and legal rules.
Rare in SMB unless you're selling into government. If you're the bidder, treat the brief like gospel.