Introduction to negotiating receivables

Getting receivables down can be hard, but if you take the right steps, it can be easier. This article will show you how to negotiate your business’s debt and get it paid off faster.

It can be hard to negotiate with your customers. You do not want to come across as too pushy, but you also want to get payment on time and in full. The key to negotiating is to know what power you have, which starts with research.

Every business needs to get and keep an acceptable position with its receivables. It gives you room to breathe when things are bad. It makes sure you have enough money to pay off debt and take care of other financial obligations.

At the end of this article, the following questions should be easy to answer:

· What are the best techniques for collecting receivables from your clients?

· Are there any tips that you use when negotiating deals with customers?

· What tips are for reducing receivables without damaging your customer relationship?

7 Tips for negotiating receivables

It can be hard to negotiate receivables, but there are ways to make it easier. Here are seven things you can do to start.

Research the client

Knowing who you are dealing with is essential when negotiating with a client. Investigate your client’s finances before making any offers or counteroffers. Research the following:

• What kind of debt do they have?
• Are any of their obligations high-interest rates?
• Are there debts besides yours that they pay off?
• How do their needs affect what they can pay off this month versus next month?
• How do they decide what should go toward paying off this debt and what should go toward paying off another debt?

Grant incentives

Grant incentives to encourage prompt payment. This is a widespread practise, and it is also legal. Put information about discounts in your terms and conditions so that customers know about them before they buy. Give discounts to people who pay on cash terms, but do not go overboard. If they pay early, you can save money (and remember there are no hard feelings when someone decides not to pay after all).

Offer something free if they pay all at once instead of in instalments.

Set your target price

Setting a target price is the first step in making a good deal. You should be able to figure out that price by looking at your customer’s credit history, their sales records, and other things. Once you have found a deal that works for both sides, it is time to negotiate!

No matter how low you want to go, avoid lowballing. Running a business requires a return on investment.

Set a deadline

A deadline is the amount of time you give yourself and your customer to do something relating to reducing the receivable. With a deadline, it can be easier to agree on a price, payment schedule, and amount.

You might want to give your customer a deadline to get them to decide on the deal right away. For example, you could offer free shipping if they pay by a certain time. They will feel like they cannot pass up this deal because waiting will not be worth it.

Setting a deadline for payment also helps keep everyone focused on reducing the amount owed.

Accept payment in instalments if appropriate.

Accepting payments in instalments is a fantastic way to cut down on your receivables. This is a solution where everyone benefits.

It is important to know how much it will cost before you accept payments this way.

To figure out the actual cost of instalments, consider the time-value of money related to the payments. These could be interest charges and inflation rates. Consider costs like processing fees for multiple payments as well.

In summary, if someone pays you in more than one instalment, you should know what to expect.

Do not be afraid to walk away.

This is a crucial part of any negotiation. If you do not get the right deal for your company, then walk away. Do not be afraid to turn down an offer if it does not make sense for your business.

It may appear risky initially, but something else is available to save money and boost sales. When someone offers less than what we wanted, we can inquire if they would offer another discount later. If they answer yes (or no), it may be worth trying again with a higher offer to get back into talks!

Approach negotiations with a strategy.

If you plan and go into negotiations with a plan, customers will pay you faster and in full.

To do this best, you need to know what your customers want and how to give it to them. Have a plan for each negotiation to make the best use of your time.

Conclusion on negotiating Receivables

The seven suggestions above can assist you in getting the most excellent offers from your clients. Its implementation will result in time savings, a reduction in receivables, and an increase in sales.

You can negotiate receivables with the information provided in the previous section. The best news is that you do not need to be a rocket scientist or an expert on debt management to tackle these challenges. All you need is common sense. If you put these seven suggestions into practise, you should be fine. Even if the first attempt is unsuccessful, you should maintain trying to collect the receivable from your customers because they will be less likely to ignore subsequent attempts.

The ability to successfully negotiate with one’s clients is a tool that should be in everyone’s toolkit. It is not always simple, but the potential rewards are substantial. Do not be hesitant to take advantage of this opportunity to get payment promptly and in full for the services you have provided; it is available to you.

When clients come to myCFOng, we provide them with solutions that will allow them to collect their receivables faster and more effectively than ever before. Contact us right now to learn more about how myCFOng can assist in the reduction of your receivables!