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Cost Cutting for Small Business - Payment Terms

There are two ways to get better payment terms from your suppliers - make sure you know what the pricing is and negotiate the payment terms last, without warning. Most businesses do not expect small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer-, Professional-, Personal businesses to negotiate payment terms, so you have the element of surprise on your side - and it makes you look more professional.

Firstly there is the extended payment term, of 60, 90 and 180 days - see if your supplier will allow any of those terms. Even if they only give you 60 days, you can always go back after 3-4 month using this payment terms in which you have shown to be trustworthy. If it is declined and only 30 days are offered - because you have no history - then this is the perfect scenario of our second method.

Early payment discounts of 2% if you pay within 7 days. This is like a 24% p.a. discount on the invoice value, not a bad way to compensate for the overdraft interest charges from your bank.

Surly you supplier is interested in your business, and is not going to decline both offers - you win either way - if they decline, then look for a new supplier. Because you are not only helping yourself with your cash-flow, but theirs too.

This entry was posted on Friday, August 24th, 2007 at 3:37 pm and is filed under outsource effectively, lower overheads, Sole-Trader, use online IT, find funding, start-up in business, plan cash-flow, bootstrap, do a reality check, plan your business, handle problems, Suppliers, do cost cutting, grow your business, recruit the right people, avoid growing pain, do credit control, Social Entrepreneur, Entrepreneur, Relationships, Business Ideas, Small Business / SOHO, Start-Up, Outsourcing, Finance, E-Commerce, Lifestyle, SOHO/SMB/SME/Micro, Boomer Business, Home Business, Generation-Y, Self-employed, Contractor, Personal Business, Freelancer, Virtual Assistants. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.