How to Negotiate for Better Payment Terms

by Brad Chacos - Updated September 26, 2017

Keeping more dollars in your pocket, for as long as possible, is a major goal for many people and businesses. One way to maximize your cash flow is to negotiate better payment terms on your recurring bills. Convincing vendors, suppliers or lenders to reduce the amount of money owed or to extend the due date on an invoice gives you more flexibility with your cash.

Contact a person with the authority to make the payment changes you desire. Ask for a supervisor when contacting a credit-card company or bank, or the accounting or sales manager for your account when dealing with a vendor or supplier.

Establish your history with the vendor or creditor. Mention how long you or your company have worked with the vendor, how often you utilize the vendor's services and the likelihood of a continuing relationship.

Tell the vendor what payment terms you're looking for. Ask for a lower price on future purchases, a lower interest rate, a discount on existing invoices, an extended due or net-payable date, or any other advantageous payment terms. Be firm and persistent, but reasonable.

Negotiate various options with the vendor or creditor if he balks at the proposed payment terms. Offer a slightly higher purchase price or a larger volume of your business if you can and are willing to do so. Arrange to pay a lender sooner and in full if she provides a discount. Work out terms that contain a favorable solution for both parties.

Describe rates or products offered by the vendor's competitors if the vendor still won't negotiate. Research the information prior to entering into negotiations with your current vendor. Threaten to close the account or stop purchasing the current vendor's services if the representative is not willing to negotiate better payment terms. Only use this method as a last resort, and only if you are actually willing to close your account.

Request a copy of the new payment terms in writing. Keep the document in your files in case accounting issues arise.

About the Author

Brad Chacos started writing professionally in 2005, specializing in electronics and technology. His work has appeared in Salon.com, Gizmodo, "PC Gamer," "Maximum PC," CIO.com, DigitalTrends.com, "Wired," FoxNews.com, NBCNews.com and more. Chacos is a frequent contributor to "PCWorld," "Laptop Magazine" and the Intuit Small Business Blog.

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