Small business owners need to find ways to improve their cash flow, reduce expenses and boost profits. One of the ways to achieve this goal is to get better payment terms from suppliers. A supplier that demands payment within a short time frame makes it difficult for your business to generate cash to cover other needs.
Here are some of the best practices that get you better payment terms and conditions.
Create and Foster Good Relationships
One of your small business growth goals often include reducing expenses. You can achieve that by creating and fostering good relationships with your suppliers. Always pay on time and communicate with suppliers. This leads to better rapport and they will feel their service is valuable to the growth of your company. These make it easier to re-negotiate payment terms when you want to get favorable rates and terms.
Find a Win-Win Deal
Identify a way to create a win-win situation for you and your suppliers. This makes you a valuable customer to your partners. They see you not only want to expand and grow, but also want to help others succeed. They’ll be more amenable to giving you better payment terms and conditions. Ask for a payment schedule that is reasonable and discounts that allows both parties financial flexibility.
Aim High but Identify a Middle Ground
Enter negotiations of your contract payment terms with high expectations. This sets the bar and determines non-negotiables for both sides. If your supplier gives these terms to you congratulations, but if not, be reasonable and find a middle ground. A hardline approach may ruin the business relationship you want to build. Be realistic in negotiations, doing so allows both parties to find a viable re-negotiated contract.
Determine which Suppliers are Worth Approaching
Not all suppliers will agree to new terms. Identify which ones are likely to conform to a new deal. Some small suppliers might not want new payment conditions because they are also trying to balance their cash flow. Bigger suppliers might be more agreeable to new terms.
These tips may help you when you plan to re-negotiate payment terms with your suppliers. Doing so provides you with financial flexibility that allows you to invest in the future of your small business and meet the needs of today. If you need assistance with updating your accounting books, check out Robookkeeper’s first-rate bookkeeping services. We can connect you with experienced virtual bookkeepers that can do your bookkeeping for you.
