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A sales rep who negotiates a 30-day payment term instead of a 45-day payment term is cash-wise. The company can get the money sooner and is able to put it to us
by jimbob45 3y ago
A sales rep who negotiates a 30-day payment term instead of a 45-day payment term is cash-wise. The company can get the money sooner and is able to put it to use elsewhere.
Well yes but at the cost of the customer’s goodwill. Now you’ve potentially lost the customer in the long-term for an extremely low short-term benefit. “Premature optimization is the root of all evil” should apply to business as much as it does coding.
- hef19898 3y agoWait until you hear of full pre-payments for some B2B sales.
- nradov 3y agoThat really depends on the customer's liquidity and cost of capital. Some customers will be happy to take shorter payment terms in exchange for other concessions. Everything is negotiable. And many customers will agree to net-30 terms in writing, but then refuse to actually pay that quickly and dare you to cut them off.
- DonsDiscountGas 3y agoDeals with customers are always going to involve tradeoffs like this; if the 30-day payment term is standard but you offer an increase to 45-days that will earn some goodwill at the expense of those 15 days, for example. If a customer has a very different time-value of money than you do, giving them a discount for prompt payment could end up working well for everybody. It's also not a short-term benefit if they are a recurring customer. I can't seem to find the article now, but I remember reading about somebody buying food for their restaurant and getting 50% discounts for paying immediately instead 30 days later. There are some obvious drawbacks to this, but it's also easy to see how the restaurant can come out ahead with a discount that large.