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The Art of Negotiating Better Terms with Suppliers by Paying Quicker
- Danielle Davis
- Mar 21
- 3 min read
The Power of Prompt Payment
In business, cashflow is king. The ability to pay suppliers quickly can give you a distinct advantage, helping to secure better terms, build stronger relationships, and ultimately improve your bottom line. But what if your own customers take too long to pay you? This is where invoice finance becomes a game-changer, giving you the working capital needed to negotiate with confidence.
Why Suppliers Value Early Payment
Suppliers operate with their own financial pressures. They have production costs, staff wages, and overheads to manage, just like any other business. When a customer offers quicker payment, it reduces their financial risk and improves their own cashflow, making them more willing to offer perks such as:
Discounted rates – Many suppliers offer early payment discounts, typically ranging from 2% to 5% off the total invoice amount.
Priority service – Paying faster can help secure priority production or faster delivery times.
Exclusive deals – Some suppliers reserve the best pricing and deals for customers who consistently pay ahead of schedule.
Stronger partnerships – Reliable and quick payments build trust, leading to more flexible credit terms in the future.
The Challenge: Waiting on Customer Payments
While paying suppliers quickly has clear benefits, many businesses struggle with long customer payment terms. If you’re waiting 30, 90, or even 120 days to receive payments, it can create a cashflow bottleneck, making early supplier payments impossible.
How Invoice Finance Solves the Problem
Negotiating better terms with suppliers starts with having better cashflow. Invoice finance, such as Invoice Factoring or Invoice Discounting, provides an immediate cash advance on your outstanding invoices, giving you the funds needed to pay suppliers without waiting for customer payments. Here’s how it works:
Raise an invoice – Once you’ve completed a job or delivered goods, invoice your customer as usual.
Get an advance – Your invoice finance provider advances up to 90% of the invoice value, typically within 24 hours, sometimes even immediately.
Pay suppliers faster – With instant cash at hand, you can settle supplier invoices quickly and negotiate better terms.
Receive the remaining balance – Once your customer pays the invoice, you receive the remaining balance minus a small service fee.
Negotiation Strategies When Paying Quicker
Armed with the ability to pay faster, here’s how you can approach suppliers for better terms:
Be upfront – Inform your suppliers that you’re willing to pay sooner in exchange for improved pricing or benefits.
Leverage competition – If you work with multiple suppliers, compare their terms and use this as a bargaining tool.
Build a track record – Consistently paying ahead of schedule strengthens your negotiating power over time.
Request bulk order discounts – If early payments allow you to place larger orders, use this to negotiate volume discounts.
Discuss flexible terms – Consider negotiating longer-term contracts with locked-in pricing benefits in exchange for early payment commitments.
Final Thoughts: Negotiating Better Terms with Suppliers
The ability to pay suppliers faster can put your business in a stronger position, unlocking cost savings, operational efficiencies, and better relationships. However, achieving this requires consistent cashflow - something invoice finance can provide without adding traditional debt.
At 12s Finance, we specialise in ultimately matching businesses with the right invoice finance provider to support their growth and negotiation strategies. If you’re ready to strengthen your supplier relationships and take control of your cashflow, get in touch today!