Small Business Cash Flow Management: Negotiate with Suppliers

by Dawn Fotopulos on September 27, 2011

Here is one more way you can improve small business cash flow management. If you’re a great customer, you pay your bills on time and your checks never bounce, you’ve got negotiating leverage with suppliers.

Small Business Cash Flow Tip #2- Ask Your Supplier for A Discount

Even if you’re a small customer, a great payment history means you can ask your suppliers for either a discount or added value which could mean cash in your pocket longer. How do you measure that? By reading your cash flow statement.

Review the current terms you have with your supplier. Usually, the terms are net 30 days. Ask for a 5% discount for payment on delivery or payment by cash.

Interest rates in the bank are so anemic, getting a discount up front means you have more cash to spend on the things that will drive revenues.

If the supplier balks, don’t argue about the idea of a discount. Argue about how large the discount should be!

Norm Brodsky of Citistorage fame was a true collaborator with his suppliers, but he made sure his account was never taken for granted. Every year, he reviewed supplier contracts, combed the market for deals, and then asked for either a discount or extra value for his account.

Sometimes it meant getting shipped a “baker’s dozen” (13) of supplies while getting charged for 12 units. Often, suppliers have free passes to trade shows or training programs.

Suppliers have great networks and few customers take advantage of influence these suppliers have. Make sure you or your staff take advantage of these. Building your intellectual capital adds real value to your business.

If you never ask, you’ll never receive. Be sure you know what is happening with the supplier’s competition before you ask. Have that knowledge so you can counter their offer with real data.

Your suppliers will respect you and go the extra mile, especially now.

If you do this with every small business resource you do business with, you’ll be shocked at how much money you can save. Included in this list should be your banking relationship.

Do not let your bank overcharge you. Know what your fees and charges are. Know what the competition is charging, including small local banks.

Be prepared to hop to a new resource after you close your books at year-end. Avoid subsidizing large banks for bad investments they’ve made.

Small local banks often give better service, charge lower fees, and are less likely to treat you like a number.

Running a small business is about maximizing your cash flow. We’ll show you how here.

If you want more Small Business Cash Flow Tips, click here.

In your corner, as always,

Dawn Fotopulos

 

 

 

 

 

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