Negotiation is a vital skill that business owners need to develop if they want to stay ahead of the game. From securing better rates to obtaining favourable payment terms, the ability to negotiate successfully with vendors has the potential to significantly impact your bottom line. Angus Sedgwick, CEO of OptiPay explains how you can get the best deals for your business.

7 tips for negotiating a better deal

1. Do your research

When it comes to negotiation, the more knowledge and preparation you’ve done, the better the outcome. Before you even think about picking up the phone or emailing a vendor it’s essential to have a clear understanding of your needs. Knowing exactly what you require allows you to approach negotiation with confidence and clarity and set the stage for a successful outcome.

Start by accessing which services or supplies are crucial to your operations and where you can see unnecessary expenses. By identifying these key areas you can prioritise your negotiation and focus on the areas that will deliver the most value to your business.

Spend time researching the current market and what else is on offer. Know what other businesses are paying for similar services and supplies which can be done through online research, industry reports or by networking with other business owners. It’s far easier to secure favourable terms for vendors if you know if their offer is competitive.

2. Build relationships

The human element in negotiations is just as important as the numbers. Strong relationships can be just as valuable as a good deal. Work on strengthening your relationships with vendors so they see you as a valuable partner rather than just another customer. They’re more likely to go the extra mile when it comes to negotiating prices, delivery terms or even special requests.

3. Timing

Optimal timing is key when it comes to successful negotiations. One of the best times to negotiate is towards the end of a vendor’s fiscal quarter or year. Vendors are often eager to close deals to meet their sales targets which can make it easier to get discounts or other incentives. Another time to consider negotiating is during slower business periods when vendors may be more flexible in order to secure your business.  Look out for seasonal discounts or promotions which may also be a great opportunity to negotiate a better rate.

4. Bundle

By consolidating your services and supplies with a single vendor you may be able to negotiate better rates and simplify your process. Bundling can offer significant cost savings with discounts for multiple products or services. Do your research carefully before you make any decisions on bundling though as you need to make sure the bundled price isn’t higher than if you sourced each item individually from different vendors.

5. Negotiate payment terms for a better deal

Price is often seen as the priority in negotiations but payment terms are just as important. Negotiating favourable payment terms can provide your business with flexibility. Ideally if you can match your supplier payment terms with your Customer payment terms, it will assist you to manage cash flow more effectively. Alternatively you could ask for early payment discounts which can reduce your overall costs.

6. Leverage

Use the competition to gain leverage in your negotiations. Have quotes from multiple vendors so you can ask a preferred vendor to match or even beat an offer to secure your business. Ensure the offers you present are legitimate and comparable in terms of quality and services and always aim for a fair outcome that benefits both parties. It’s a fine line between seeking out a better deal and putting unfair pressure on vendors which could damage business relationships.

7. Walking away from deals

A key part in any negotiation is being prepared to walk away. Knowing when is the right time to do this is the tricky part. Before entering negotiations make sure you have clear limits established – know the maximum price you’re willing to pay and the minimum service levels you’ll accept. Having strong boundaries means you can make decisions confidently during the negotiation process. Have alternate vendors lined up so if negotiations fall over with your preferred supplier you have the confidence in knowing there are other options.

Negotiating for a better deal is not a one off thing. Business owners should be regularly reviewing vendor agreements to help ensure they continually get the best value over time. Stay proactive when it comes to your supplier arrangements, schedule regular reviews of your contracts and don’t hesitate to negotiate better terms until you find the best options available to you.

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