Are you a small business owner looking to get the best deals from your suppliers? You’re not alone. For many small businesses, managing cash flow and keeping costs down can ensure the continuity of the business. One powerful way to do that is to learn how to negotiate better terms with your suppliers.
Negotiating may sound intimidating, especially if you’re just starting out or don’t think you have much leverage. But with the right approach, even small buyers can secure better prices, payment terms, or extras, without straining your supplier relationships.
1. Ensure You Provide Value
Your negotiations with your supplier should not make you come across as someone who’s just there to take without giving anything back. This isn’t a one-sided transaction, it’s a relationship. And like any relationship, it needs to benefit both sides.
One way to provide value is by showing your supplier that you’re reliable and easy to work with. Do you pay on time? Are your orders consistent? Do you communicate clearly and stick to agreed timelines?
You can also offer value in other ways, like promoting their brand on your platforms if you have a strong online presence, or referring them to other businesses in your network. Maybe you’re able to commit to long-term contracts or larger volumes in exchange for better pricing or more flexible terms.
2. Prioritise Payment Terms Over Price
Cash flow isn’t just about what you pay, but when you pay high fees, it affects your cash flow. Many small businesses chase discounts, but a 5% price cut doesn’t help much if you’re still paying upfront and waiting up to 60 days to get paid by your clients.
Instead, focus on extending your payment terms. For instance, think about negotiating to pay in 30 days instead of 7, or stretch your current 30-day terms to 45 days.
Every extra week gives you more breathing room to reinvest, sell stock, or recover from a slow month. Frame it as a win for the supplier too: if you can get more time to pay, you’ll be able to order more consistently.
3. Lock in Fixed Pricing During Volatile Periods
If your supplier has been constantly increasing prices, that unpredictability can ruin how you forecast or price your own products. Well, you don’t have to wait for the next increase; you can work on asking for price stability now.
Even if they won’t budge on the current rate, ask if they’re willing to freeze prices for the next 6 months, or even a year. That predictability can help you plan smarter, manage your cash flow, and avoid passing surprise hikes on to your customers.
4. Decide on Your Deal Breakers and Stick to Them
Before you start negotiating, take the time to figure out what matters most to your business. What can you bend on, and what’s non-negotiable?
This helps you avoid making rushed decisions that you might regret later. When you know your limits and know how to relay them through good business communication, it’s easier to stay focused and protect your business from agreements that just don’t work for you.
5. Turn Your Supplier into a Business Partner
If the opportunity arises, you can propose a mutually beneficial partnership where you work on a joint product or service. You could provide insight on the market, customer feedback, etc.
In return, you could receive exclusive pricing, priority slots for production, or faster deliveries, and other benefits that would be good for you and the supplier. This turns your supplier from a vendor into a strategic partner.
6. Leverage Slow Periods to Renegotiate
Suppliers often experience seasonal slowdowns or off-peak cycles where demand dips. These quieter periods are the perfect time to revisit your terms. When things are slow, suppliers are usually more open to negotiation just to keep their production lines moving or hit sales targets.
You can use this to your advantage by asking for better pricing, smaller minimum orders, or quicker turnaround times. Don’t think of it as needing them to renegotiate, but think of it as you helping them stay busy and keep business.
For example, if you know your supplier has a dip in orders every January, reach out in November and propose a bulk order at a lower price, or ask if they’d be willing to offer better payment terms for early commitments.
