{"id":28730,"date":"2025-03-12T09:34:35","date_gmt":"2025-03-12T13:34:35","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=28730"},"modified":"2025-05-22T11:16:25","modified_gmt":"2025-05-22T15:16:25","slug":"negotiating-payment-terms","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/negotiating-payment-terms\/","title":{"rendered":"How to negotiate payment terms with your suppliers"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-us\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tHow to negotiate payment terms with your suppliers\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2025-03-12T09:34:35-04:00\">March 12, 2025<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"How to negotiate payment terms with your suppliers\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-us\/blog\/negotiating-payment-terms\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n<div class=\"wp-block-post-author\">\n\t\t\t<div class=\"co-authors\">\n\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-us\/blog\/author\/yassirmalik\/\">\n\t\t\t\t<img loading=\"lazy\" decoding=\"async\" width=\"40\" height=\"40\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2024\/03\/Yassir-Malik.jpg\" class=\"entry-author__image\" alt=\"yassir-malik-profile-picture\" \/>\t\t\t\t<span class=\"entry-author__name\">Yassir Malik<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t<\/div>\n\t\t<\/div>\n\n\n\n<p>Rising costs and economic uncertainty are putting pressure on businesses of all sizes, making it more important than ever to manage cash flow effectively.<\/p>\n\n\n\n<p>From the increasing prices of raw materials to greater labor and operational expenses, maintaining financial flexibility is crucial for stability and growth.<\/p>\n\n\n\n<p>One often overlooked but highly effective strategy to safeguard your business is to negotiate better payment terms with suppliers.<\/p>\n\n\n\n<p>By extending payment terms or structuring deadlines that align with your cash flow cycle, you can create breathing room, strengthen your financial position, and navigate uncertainty with greater confidence.<\/p>\n\n\n\n<p>This article will explore key negotiation strategies to help you optimize payment terms, improve liquidity, and set your business up for long-term success.<\/p>\n\n\n\n<p><strong>Here&#8217;s what we&#8217;ll cover<\/strong><\/p>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-challenges-of-rising-costs-on-business-operations\" data-level=\"2\">Challenges of rising costs on business operations<\/a><ul><li><a href=\"#h-1-inflation\" data-level=\"3\">1. Inflation<\/a><\/li><li><a href=\"#h-2-access-to-credit\" data-level=\"3\">2. Access to credit<\/a><\/li><li><a href=\"#h-3-interest-rate-volatility\" data-level=\"3\">3. Interest rate volatility<\/a><\/li><li><a href=\"#h-4-hiring-and-employee-retention\" data-level=\"3\">4. Hiring and employee retention<\/a><\/li><li><a href=\"#h-5-supply-chain-disruptions-and-trade-tariffs\" data-level=\"3\">5. Supply chain disruptions and trade tariffs<\/a><\/li><\/ul><\/li><li><a href=\"#h-managing-cash-flow-by-negotiating-payment-terms\" data-level=\"2\">Managing cash flow by negotiating payment terms<\/a><\/li><li><a href=\"#h-terms-on-an-invoice-to-be-aware-of\" data-level=\"2\">Terms on an invoice to be aware of<\/a><\/li><li><a href=\"#h-pay-early-or-pay-later\" data-level=\"2\">Pay early or pay later?<\/a><\/li><li><a href=\"#h-how-to-negotiate-payment-terms\" data-level=\"2\">How to negotiate payment terms<\/a><ul><li><a href=\"#h-1-tailor-your-approach-for-new-versus-existing-clients\" data-level=\"3\">1. Tailor your approach for new versus existing clients<\/a><\/li><li><a href=\"#h-2-prioritize-your-negotiation-targets\" data-level=\"3\">2. Prioritize your negotiation targets<\/a><\/li><li><a href=\"#h-3-define-payment-arrangements-early\" data-level=\"3\">3. Define payment arrangements early<\/a><\/li><li><a href=\"#h-4-be-transparent-and-build-trust\" data-level=\"3\">4. Be transparent and build trust<\/a><\/li><li><a href=\"#h-5-stay-flexible-and-aim-for-compromise\" data-level=\"3\">5. Stay flexible and aim for compromise<\/a><\/li><li><a href=\"#h-6-do-your-research\" data-level=\"3\">6. Do your research<\/a><\/li><\/ul><\/li><li><a href=\"#h-how-to-secure-timely-payments-after-negotiating-terms\" data-level=\"2\">How to secure timely payments after negotiating terms<\/a><ul><li><a href=\"#h-invoice-promptly-and-include-key-details\" data-level=\"3\">Invoice promptly and include key details<\/a><\/li><li><a href=\"#h-follow-up-quickly-on-late-payments\" data-level=\"3\">Follow up quickly on late payments<\/a><\/li><li><a href=\"#h-highlight-payment-penalties\" data-level=\"3\">Highlight payment penalties<\/a><\/li><li><a href=\"#h-use-guarantees-when-necessary\" data-level=\"3\">Use guarantees when necessary<\/a><\/li><\/ul><\/li><li><a href=\"#h-simplify-your-payment-process\" data-level=\"2\">Simplify your payment process<\/a><\/li><li><a href=\"#h-final-thoughts\" data-level=\"2\">Final thoughts<\/a><\/li><\/ul><\/div>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Small business survival toolkit<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get your free guide, business plan template, and cash flow forecast template to help you run your business and achieve your goals.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-aee5a8c2-281d-42bb-8da2-eda5b62f63c6\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download your free toolkit<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t<div class=\"single-cta__downloads\">\n\t\t\t\t\t\n\t\t\t\t\t10,548 readers have downloaded this toolkit\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1327127856-1440x810.jpg\" class=\"single-cta__image\" alt=\"Female hands working on a laptop\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1327127856-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-challenges-of-rising-costs-on-business-operations\"><strong>Challenges of rising costs on business operations<\/strong><\/h2>\n\n\n\n<p>If you\u2019re in charge of managing your company\u2019s finances, you\u2019ve likely seen firsthand how rising costs are making it harder for businesses across the US to maintain stability and achieve growth.<\/p>\n\n\n\n<p>For countless owners, managing these expenses can feel like an uphill battle.<\/p>\n\n\n\n<p>Here\u2019s a closer look at five major factors driving these rising costs and how they impact your operations.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-inflation\"><strong>1. Inflation<\/strong><\/h3>\n\n\n\n<p>Inflation is one of today\u2019s biggest hurdles, driving up the cost of goods and services while squeezing already narrow profit margins\u2014especially for SMEs.<\/p>\n\n\n\n<p>According to the <a href=\"https:\/\/www.bls.gov\/opub\/ted\/2022\/consumer-prices-up-9-1-percent-over-the-year-ended-june-2022-largest-increase-in-40-years.htm\" target=\"_blank\" rel=\"noreferrer noopener\">US Bureau of Labor Statistics<\/a>, inflation rates reached historic highs in recent years, with annual increases in the Consumer Price Index (CPI) peaking at over 9% in mid-2022.<\/p>\n\n\n\n<p>These rising costs directly impact operational expenses, from raw materials and transportation to utilities and wages.<\/p>\n\n\n\n<p>Inflation can severely strain budgets for SMEs, which often lack the financial buffers of larger corporations.<\/p>\n\n\n\n<p>Every extra dollar spent on raw materials, transportation, and wages is one less dollar for reinvesting in growth, such as hiring or expanding into new markets.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-access-to-credit\"><strong>2. Access to credit<\/strong><\/h3>\n\n\n\n<p>Financing has become more complex, particularly after several regional bank closures in 2023 tightened lending conditions.<\/p>\n\n\n\n<p>According to the <a href=\"https:\/\/www.federalreserve.gov\/data\/sloos\/sloos-202410.htm\" target=\"_blank\" rel=\"noreferrer noopener\">Federal Reserve\u2019s Seniors Loan Officer Opinion Survey<\/a>, nearly half of banks reported stricter lending standards for commercial and industrial loans following these closures.<\/p>\n\n\n\n<p>Without reliable credit, your business may find it harder to cover day-to-day expenses, let alone invest in growth opportunities.<\/p>\n\n\n\n<p>That\u2019s why negotiating <a href=\"https:\/\/www.sage.com\/en-us\/blog\/invoice-payment-terms-definition-and-tips\/\">better payment terms<\/a> with your suppliers is more important than ever\u2013it can provide the steady cash flow you need to weather these challenges.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-3-interest-rate-volatility\"><strong>3. Interest rate volatility<\/strong><\/h3>\n\n\n\n<p>Unpredictable interest rates make planning tough for your business, hindering long-term strategies and major financial commitments.<\/p>\n\n\n\n<p>In 2023, the Federal Reserve raised rates to their <a href=\"https:\/\/www.bbc.co.uk\/news\/business-66316710\" target=\"_blank\" rel=\"noreferrer noopener\">highest level in over 20 years<\/a>, peaking at 5.5% in an effort to curb inflation.<\/p>\n\n\n\n<p>This move, however, also drove up borrowing costs, putting additional pressure on SMEs that rely on loans to fund operations or growth.<\/p>\n\n\n\n<p>To try and counter this, in 2024, the Fed made its first interest rate cut in four years and is considering further cuts, which should ease a bit of pressure on borrowers but by how much is unknown.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-4-hiring-and-employee-retention\"><strong>4. Hiring and employee retention<\/strong><\/h3>\n\n\n\n<p>If you\u2019re managing a small business, you\u2019ve likely also felt the pressure of rising wages and benefits as competition for skilled workers heats up.<\/p>\n\n\n\n<p>Finding and keeping the right talent isn\u2019t just challenging\u2014it\u2019s getting more expensive.<\/p>\n\n\n\n<p>A survey by the <a href=\"https:\/\/www.nfib.com\/news-article\/monthly_report\/jobs-report\/\" target=\"_blank\" rel=\"noreferrer noopener\">National Federation of Independent Business (NFIB)<\/a> found nearly half of small business owners struggle to fill job openings due to a lack of qualified candidates, driving up recruitment expenses.<\/p>\n\n\n\n<p>To stay competitive, SMEs are finding creative ways to stand out\u2014such as offering professional development opportunities.<\/p>\n\n\n\n<p>At the same time, <a href=\"https:\/\/www.sage.com\/en-us\/blog\/why-you-should-be-doing-cash-flow-analysis\/\" target=\"_blank\" rel=\"noreferrer noopener\">managing cash flow<\/a> effectively\u2014by negotiating better payment terms with suppliers, for instance\u2014can free up the resources you need to invest in hiring and retention strategies.<\/p>\n\n\n\n<p>This not only helps your business stay afloat but also positions you for long-term success in a tight labor market.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-5-supply-chain-disruptions-and-trade-tariffs\"><strong>5. Supply chain disruptions and trade tariffs<\/strong><\/h3>\n\n\n\n<p>Trade tariffs significantly influence supply chain dynamics, often leading to increased costs and operational challenges for businesses.<\/p>\n\n\n\n<p>Recent developments, such as the <a href=\"https:\/\/www.wsj.com\/economy\/trade\/trump-tariffs-what-next-prices-inflation-f497f161\" target=\"_blank\" rel=\"noreferrer noopener\">US imposing tariffs of 25%<\/a> on goods from Canada and Mexico and 10% on Chinese imports, have heightened these challenges.<\/p>\n\n\n\n<p>These measures can result in higher prices for raw materials and components, prompting companies to seek alternative suppliers or adjust their sourcing strategies.<\/p>\n\n\n\n<p>Such adjustments can lead to delays and increased expenses, further complicating supply chain management.<\/p>\n\n\n\n<p>Smaller businesses, lacking the financial resilience of larger corporations, are particularly susceptible to these disruptions.<\/p>\n\n\n\n<p>Negotiating favorable payment terms becomes crucial in this context, as it can help stabilize cash flow, mitigate the impact of rising costs, and maintain operational continuity.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-managing-cash-flow-by-negotiating-payment-terms\"><strong>Managing cash flow by negotiating payment terms<\/strong><\/h2>\n\n\n\n<p>With inflation, tight credit, fluctuating interest rates, hiring challenges, and supply chain disruptions all impacting your bottom line, managing cash flow effectively has never been more important.<\/p>\n\n\n\n<p>One powerful way to stay ahead?<\/p>\n\n\n\n<p>Negotiating better payment terms\u2014both with your suppliers and your customers.<\/p>\n\n\n\n<p>Payment terms define how and when money changes hands.<\/p>\n\n\n\n<p>While smaller orders might call for upfront payment, larger or custom orders can allow greater flexibility\u2014such as installment plans split between a deposit, scheduled payments, and a final balance upon delivery.<\/p>\n\n\n\n<p>On the flip side, you can also work with customers to structure payment schedules that align with your revenue needs and help minimize delays.<\/p>\n\n\n\n<p>Taking a proactive approach to terms negotiations can boost liquidity, free up working capital, and give your business the financial flexibility to navigate economic uncertainty with confidence.<\/p>\n\n\n\n<p>By keeping a clear view of your finances\u2014through tools like a <a href=\"https:\/\/www.sage.com\/en-us\/blog\/cash-flow-statement-template\/\" target=\"_blank\" rel=\"noreferrer noopener\">cash flow statement template<\/a>\u2014you\u2019ll know the best times to send or request payments.<\/p>\n\n\n\n<p>A well-planned schedule fosters trust, aligns payment cycles with your cash flow, and even unlocks discounts that improve your bottom line. <\/p>\n\n\n\n<p>You can set all these things out in an invoice.<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Small business survival toolkit<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get your free guide, business plan template, and cash flow forecast template to help you run your business and achieve your goals.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-aee5a8c2-281d-42bb-8da2-eda5b62f63c6\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download your free toolkit<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t<div class=\"single-cta__downloads\">\n\t\t\t\t\t\n\t\t\t\t\t10,548 readers have downloaded this toolkit\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1327127856-1440x810.jpg\" class=\"single-cta__image\" alt=\"Female hands working on a laptop\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1327127856-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-terms-on-an-invoice-to-be-aware-of\"><strong>Terms on an invoice to be aware of<\/strong><\/h2>\n\n\n\n<p>When <a href=\"https:\/\/www.sage.com\/en-us\/blog\/how-to-write-an-invoice\/\" target=\"_blank\" rel=\"noreferrer noopener\">writing an invoice<\/a>, it\u2019s important to be clear about when and how much needs to be paid.<\/p>\n\n\n\n<p>Here are some common payment terms you should keep in mind:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Payment in Advance (PIA): <\/strong>payment must be made before goods or services are delivered.<\/li>\n\n\n\n<li><strong>Net 7, 10, 15, 30, 60, 90: <\/strong>payment is due within 7, 10, 15, 30, 60, or 90 days from the invoice date.<\/li>\n\n\n\n<li><strong>Cash on Delivery (COD): <\/strong>payment is collected at the time of delivery.<\/li>\n\n\n\n<li><strong>End of Month (EOM):<\/strong> payment is due at the end of the month in which the invoice is issued.<\/li>\n\n\n\n<li><strong>1MD\u20132MD:<\/strong> payment is due one or two months after a full month\u2019s worth of goods or services has been delivered.<\/li>\n\n\n\n<li><strong>5\/10 Net 30: <\/strong>a 5% discount applies if payment is received within 10 days. Otherwise, the full amount is due within 30 days.<\/li>\n\n\n\n<li><strong>21 MFI (Month Following Invoice):<\/strong> payment must be made by the 21st of the month following the invoice date.<\/li>\n\n\n\n<li><strong>Cash Before Shipment (CBS):<\/strong> payment is required upfront, before the creation or delivery of goods.<\/li>\n\n\n\n<li><strong>Line of credit: <\/strong>payment may be spread out over time, up to an agreed credit limit.<\/li>\n\n\n\n<li><strong>Stage payments: <\/strong>payments are made in installments at set stages of a project or contract.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-pay-early-or-pay-later\"><strong>Pay early or pay later?<\/strong><\/h2>\n\n\n\n<p>Deciding when to pay depends on your cash flow cycles and supplier relationships.<\/p>\n\n\n\n<p>Some suppliers offer discounts for early payments\u2014a worthwhile perk for businesses with enough liquidity.<\/p>\n\n\n\n<p><a href=\"https:\/\/group.atradius.com\/knowledge-and-research\/reports\/b2b-payment-practices-trends-us-2024\" target=\"_blank\" rel=\"noreferrer noopener\">According to research by Atradius<\/a>, 42% of invoices are paid on time, while 8% are eventually written off as uncollectible.<\/p>\n\n\n\n<p>Paying promptly can strengthen supplier relationships and potentially reduce costs.<\/p>\n\n\n\n<p>On the other hand, asking for extended payment terms can help you align payments with incoming revenue and maintain financial stability.<\/p>\n\n\n\n<p>Balancing these strategies is part of a broader negotiation process\u2014one that can ultimately improve your bottom line and keep both you and your suppliers on good terms.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-negotiate-payment-terms\"><strong>How to negotiate payment terms<\/strong><\/h2>\n\n\n\n<p>Negotiating favorable payment terms can strengthen your financial position, help you retain more cash, and reduce reliance on loans or overdrafts\u2014all of which can lead to better partnerships with suppliers and customers.<\/p>\n\n\n\n<p>Here are several strategies for getting the best possible arrangements:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-tailor-your-approach-for-new-versus-existing-clients\"><strong>1. Tailor your approach for new versus existing clients<\/strong><\/h3>\n\n\n\n<p>Understanding who you\u2019re working with is the foundation of a successful negotiation.<\/p>\n\n\n\n<p>Your tactics will naturally differ for new clients and those you\u2019ve served for years:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-new-clients\"><strong>New clients<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Set clear expectations: <\/strong>agree on payment schedules and terms before starting the work.<\/li>\n\n\n\n<li><strong>Offer early payment incentives:<\/strong> provide a small discount or perk to encourage prompt payments.<\/li>\n\n\n\n<li><strong>Communicate late fees:<\/strong> establish penalties upfront to discourage delays.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-existing-clients\"><strong>Existing clients<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Listen first: <\/strong>talk through any challenges they face with paying on time.<\/li>\n\n\n\n<li><strong>Suggest payment plans: <\/strong>offer installment options or other creative arrangements.<\/li>\n\n\n\n<li><strong>Find a win-win: <\/strong>be ready to adjust terms within reason if it means a healthier, long-term relationship.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-prioritize-your-negotiation-targets\"><strong>2. Prioritize your negotiation targets<\/strong><\/h3>\n\n\n\n<p>Start by focusing on your biggest suppliers first\u2014it\u2019s a smarter and more efficient way to negotiate.<\/p>\n\n\n\n<p>Each conversation will give you valuable insights that you can use to refine your approach moving forward.<\/p>\n\n\n\n<p>Plus, as you build your priority list, you might discover alternative suppliers offering better terms or pricing, giving you more negotiation options.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-3-define-payment-arrangements-early\"><strong>3. Define payment arrangements early<\/strong><\/h3>\n\n\n\n<p>When collaborating with a new supplier, don\u2019t wait until the last minute to discuss payment schedules, pricing, and delivery details.<\/p>\n\n\n\n<p>It\u2019s best to bring these up early to align terms with your cash flow needs rather than just accepting default options.<\/p>\n\n\n\n<p>For instance, your businesses might prefer to extend invoices beyond 90 days to manage large expenses better.<\/p>\n\n\n\n<p>Bigger companies often have an easier time with payment term extensions, but smaller firms can achieve similar results by highlighting consistent order volumes and reliable payment history.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-4-be-transparent-and-build-trust\"><strong>4. Be transparent and build trust<\/strong><\/h3>\n\n\n\n<p>Suppliers want to know the reason behind your request for different terms.<\/p>\n\n\n\n<p>Rather than issuing ultimatums, explain how more flexible payment cycles can support continued or increased business.<\/p>\n\n\n\n<p>Additional strategies include:<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-promoting-their-services\"><strong>Promoting their services<\/strong><\/h4>\n\n\n\n<p>Share information about your supplier\u2019s offerings within your networks or to potential clients.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-committing-to-future-orders\"><strong>Committing to future orders<\/strong><\/h4>\n\n\n\n<p>Promise a minimum spend or a set number of purchases in exchange for extended terms.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-5-stay-flexible-and-aim-for-compromise\"><strong>5. Stay flexible and aim for compromise<\/strong><\/h3>\n\n\n\n<p>Negotiations often succeed when both sides benefit. If you propose moving from net 30 to net 90 terms, consider settling on net 45 as a happy medium.<\/p>\n\n\n\n<p>Finding the balance fosters a collaborative environment and sets the tone for future deals.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-6-do-your-research\"><strong>6. Do your research<\/strong><\/h3>\n\n\n\n<p>Before negotiating, take the time to understand the standards of your supplier\u2019s industry.<\/p>\n\n\n\n<p>For example, North American firms are experiencing an <a href=\"https:\/\/atradiuscollections.com\/global\/knowledge-and-research\" target=\"_blank\" rel=\"noreferrer noopener\">uptick in late payments and bad debt<\/a>: 55% of B2B invoiced sales are overdue, and around 9% get written off entirely.<\/p>\n\n\n\n<p>In the electronics and IT sector, late payments have risen due to liquidity problems and invoice disputes, making suppliers wary of extending lenient terms. <\/p>\n\n\n\n<p>With insights into your cash flow needs and the challenges your suppliers face, you\u2019ll be well-prepared to secure payment terms that benefit everyone involved.<\/p>\n\n\n\n<div class=\"single-cta gated-content\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Small business survival toolkit<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get your free guide, business plan template, and cash flow forecast template to help you run your business and achieve your goals.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-aee5a8c2-281d-42bb-8da2-eda5b62f63c6\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Download your free toolkit<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t<div class=\"single-cta__downloads\">\n\t\t\t\t\t\n\t\t\t\t\t10,548 readers have downloaded this toolkit\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1327127856-1440x810.jpg\" class=\"single-cta__image\" alt=\"Female hands working on a laptop\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1327127856-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-secure-timely-payments-after-negotiating-terms\"><strong>How to secure timely payments after negotiating terms<\/strong><\/h2>\n\n\n\n<p>Negotiating better payment terms is a great start, but making sure you actually get paid on time is just as important.<\/p>\n\n\n\n<p>Here are a few simple ways to keep things running smoothly:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-invoice-promptly-and-include-key-details\"><strong>Invoice promptly and include key details<\/strong><\/h3>\n\n\n\n<p>Send invoices immediately after you deliver goods or services. <\/p>\n\n\n\n<p>Make sure the invoice includes clear payment terms, due dates, and any penalties for late payments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-follow-up-quickly-on-late-payments\"><strong><strong>Follow up quickly on late payments<\/strong><\/strong><\/h3>\n\n\n\n<p>Don\u2019t wait to chase overdue payments. <\/p>\n\n\n\n<p>A friendly reminder shortly after the due date can often resolve delays without straining the client relationship.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-highlight-payment-penalties\"><strong>Highlight payment penalties<\/strong><\/h3>\n\n\n\n<p>Reinforce the terms of your agreement by clearly communicating any late payment fees or penalties to encourage timely action.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-use-guarantees-when-necessary\"><strong>Use guarantees when necessary<\/strong><\/h3>\n\n\n\n<p>If the client has provided collateral or assets as a backstop guarantee, consider this option a last resort.<\/p>\n\n\n\n<p>However, always exhaust other avenues first, as maintaining a positive relationship is crucial for long-term success.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-simplify-your-payment-process\"><strong>Simplify your payment process<\/strong><\/h2>\n\n\n\n<p>Negotiating payment terms is a strong step toward healthier cash flow, but pairing that strategy with the right tools can take it even further.<\/p>\n\n\n\n<p><a href=\"https:\/\/www.sage.com\/en-us\/accounting-software\/invoicing\/\" target=\"_blank\" rel=\"noreferrer noopener\">Online invoicing software<\/a> automates the billing process, ensures on-time payments, and keeps you updated with real-time tracking\u2014so you can quickly follow up on any overdue invoices.<\/p>\n\n\n\n<p>Features like automated reminders and multiple payment options (credit card, ACH, PayPal) help customers settle bills faster, reducing late payments and freeing you to focus on growth.<\/p>\n\n\n\n<p>By integrating advanced financial tools, you can turn payment challenges into genuine opportunities for lasting success.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-final-thoughts\"><strong>Final thoughts<\/strong><\/h2>\n\n\n\n<p>In times of economic uncertainty and rising costs, securing more favorable payment terms isn\u2019t just a financial convenience\u2014it\u2019s a strategic necessity.<\/p>\n\n\n\n<p>Open communication with your suppliers is key to reaching agreements that benefit both sides.<\/p>\n\n\n\n<p>By taking a proactive and strategic approach\u2014through preparation, patience, and transparency\u2014you can secure payment terms that not only improve cash flow but also help your business remain agile and resilient in an unpredictable market.<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to our Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get our latest business advice delivered directly to your inbox.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-ab515c6e-7e90-4c2f-a67e-113872516e8b\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"Working from home with tea in hand\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Are rising costs creating pressure on your cash flow? Knowing how to negotiate better payment terms with your suppliers could be your business&#8217;s strategic edge to stay ahead.<\/p>\n","protected":false},"author":1774,"featured_media":9354,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[46,43,49],"tags":[299,34,155,36,431],"business_type":[40],"lilypad":[],"context":[],"industry":[],"persona":[96,97,95],"imagine_tag":[462,230,237],"coauthors":[509],"class_list":["post-28730","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-growth-customers","category-money-matters","category-trends-insights","tag-cash-flow","tag-small-business","tag-staying-competitive","tag-supply-chain-management","tag-working-capital","business_type-small-business"],"sage_meta":{"region":"en-us","author_name":"Yassir Malik","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-934870386.jpg","imagine_tags":{"462":"Payments","230":"Small business","237":"Supply Chain Management"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/28730","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/1774"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=28730"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/28730\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/9354"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=28730"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=28730"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=28730"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=28730"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=28730"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=28730"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=28730"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=28730"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=28730"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=28730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}