7 Tips for Successful Vendor Negotiation

As a business owner, you know the importance of pinching your pennies where you can. Businesses often forget to look for cost-saving opportunities in their most basic relationships: among their suppliers. If your business relies on vendors or suppliers to create your product or sell your services, it might be time to look at your contracts and rates with your suppliers. You may be surprised to find that if you make vendor negotiation a priority, you can reduce your rates and put more back in your overall budget.

As you embark on cost-cutting measures, use these tips for successful vendor negotiation:

1. Manage Your Relationship – As with anything, your vendors will be much more willing to work with you if they value your relationship and you have a bit of rapport. Work hard to keep your vendor relationships strong to make sure that your vendors are willing to go to bat for you.
   

2. Be Prepared – Your best bet for successfully navigating your vendor negotiation is to come prepared. Don’t do it on a whim; but rather, take the time to look at the numbers, study your trends, and decide what you’re hoping to get in the deal. Look for your bottom dollar so to speak, and decide up front how much you are willing to compromise. By having these numbers decided upon ahead of time, you’ll be in a great position to make a solid case and will have more success in getting your suppliers to agree.
   

3. Show Them with Numbers – Don’t just have a rough sketch of the numbers in your head. Instead, pull a report that shows the business you’ve done with your suppliers over the years. Make the case for the fact that you’re a good, on-time customer. By giving them something concrete to grasp, they will be more likely to agree to your new proposed terms.
   

4. Prove Your Potential – You want to prove to your suppliers not only that you’re a good current customer, but that you’ll also be a good future customer. If your supplier knows that your business, and thus, your purchases, are trending up – they will be more likely to want to keep you happy by agreeing to your proposed changes to the terms of your existing agreement.
   

5. Shop Around – It’s always a good tool to have in your back pocket to know what the competition is up to and will offer your business. If you find a better deal elsewhere, you can always mention to your current supplier that you might leave for their competition. Nothing gets a vendor moving like thinking about losing your business. Plus, you might just find another deal that’s too good to pass up.  
   

6. Check on Incentives – Many vendors and suppliers offer incentives for things like bulk orders, on-time or early payments, cash payments, and the like. If you haven’t checked with your vendors in a while, it’s a good time to check on potential incentives to make sure you’re not missing out on anything that will potentially lower your costs.
   

7. Get it in Writing – As with any business agreement, make sure you get your new terms in writing. You never know what will happen, and if it’s in writing and signed by both parties, you can always pull it up and prove your terms if there are ever any questions.

If your business needs help with vendor management and negotiations, please get in touch with Tally Services. We’re experts at looking over your vendor and supplier contracts to find places to reduce costs and improve terms. We’re here to help your company with your vendor negotiations and overall business management. Please contact us to learn more about our services and how we can help!