Your customer has chosen YOU for a number of reasons i.e. they need your product/service and they ‘like’ you. So, an opportunity exists to negotiate payment terms. When striking the deal consider discussing or formalising payment terms. Anticipate prior to this point what your cash flow challenges might look like. A simple cash flow projection can predict this. Here are our tips around leveraging a good customer relationship for great cash flow.

1. Be transparent

Discuss with your customer openly and honestly any future business cash flow challenges resulting from suggested terms, if they don’t work for you. If you’re anticipating cash flow challenges address this up front. Don’t wait until your business is hurting in 3 months’ time and you can’t meet an order.

Also, if you’re worried about cash flow challenges, then you’re not alone. We know from Dun & Bradstreet – 7 out 10 business managers believe cash flow will be an issue in the coming months. Chances are your customers may have cash flow issues too, and will be empathetic to your position.

In summary, transparency builds trust. Trust builds relationships. Relationships can retain customers for the long term.

2. Always negotiate

Don’t be afraid to negotiate or suggest a contract adjustment. If you need early cash flow to process an order, perhaps, look to invoice in ‘chunks’ or instalments. You may want to consider offering discounted terms on particular invoices. If faster cash flow means better service or product delivery, explain how they may benefit.

3. “No surprises”

Anticipate and make your customer aware of potential finance arrangements up front. If you are still struggling to get the terms you need, we suggest you let them know you’ll be using a finance partner on occasions. For example;

“From time to time we bring in a finance partner…we often use invoice finance or XYZ company to fund our continuing growth. This may involve…”.

If you don’t end up needing the finance facility, that’s great. If you do, it should be an easy conversation to have.

At Fifo Capital, we see each day the way good relationships can bring in and maintain business for our customers. If you want to know more about how our customers leverage relationships to improve your cash flow position, then talk to us today.