Strategies for Managing Directors

Sell Your Terms of Trade Kim Radok May, 2013

There will be times when you are about to sign up a new customer and they baulk at signing or accepting of your terms of trade.

There are many reasons which they will raise to try and force you to sacrifice some of your power and rights. If you accept everything the customer says about the harshness of your terms of trade, then you give them the ability to slow pay or not pay you at all.

On the other hand, you can take a dogmatic approach and simply tell the customer; "This is how we do business". This attitude may cost you a sale.

Alternatively you can negotiate a mutually agreeable set of terms. In such circumstances, you may trade of a right for another benefit. For instance, you may give extended terms for a larger sale price, a discount for an early payment, a cheaper price for an up-front cash payment, or part payments etc.

Many business people assume terms of trade are only credit policy and payment oriented. However your terms of trade can also be used as part of the sales process to negotiate a different set of sales-payment arrangements from the competition.

A sales contract between a supplier and their customer is rarely easy or straightforward. Sometimes you even have to think outside the square to find the right sales strategy. Reverting to your terms of trade is one such sales strategy.

Therefore if you can learn how to use your terms of trade as part of the sales process, inevitably you will increase your sales opportunities. In turn this will assist you to maintain your cashflow and profitability.

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