Recommendations for negotiating payment terms with companies in Spain
Every business has a diversity of suppliers that provide you with a variety of things, such as electricity, water, connections, product raw materials, and other services. They all include a form of payment. As a result, the organization must monitor both fixed and variable expenses to ensure that it has the capital necessary to meet them. The supplier, the company, or both can set these deadlines or payment methods.
In Spain, the legal payment deadline is 60 days for commercial transactions between companies. However, it’s common for companies to try to extend this deadline beyond 60 days, which can create cash flow problems for suppliers.
We have to pay the different suppliers for the invoices that come to us every month. In reality, the ideal is to increase payment terms to supply companies through contractual negotiation. Achieving this will allow us to increase the frequency of payments, which will increase cash flow by financing operations with the money we have withheld.
To achieve this goal, effective supplier payment management is necessary. In other words, to properly and successfully complete all the administrative and financial procedures necessary to achieve this. It’s time to negotiate the form and terms of payment when we hire a new supplier. But it will also be crucial to review existing payment systems.
Because there are specific raw materials or services that will be needed to develop the product and maintain an optimal stock to achieve the objectives, managers must consider scheduling purchases to optimize the company’s treasury.
In addition, it will be necessary to look for the best providers in the market, the strongest and those that offer the best conditions for the service. To make the best decision for the benefit of the company at all times, experts recommend having several suppliers and comparing them.
It is advisable to keep in constant contact with the supplier, organize meetings and visit them from time to time, as well as to treat them as a strategic ally.
To negotiate with complicated suppliers, we must first compare our provider’s prices and services with others. To gain a strategic advantage when the trading day comes, the company must plan the trading process. You must be in charge of the decision-making of the department or company that is carrying out the negotiation.
In order to negotiate with suppliers, we must have a path paved and prepared. To achieve this, it is necessary for the company to establish a solid internal policy that regulates payment procedures and ensures that the necessary funds are delivered on time.
We must consider the day it will be paid. The company must schedule one day a month to pay all suppliers. Paying for services in cash can overload the treasury. In this way, the financial and management departments will be aware of the deadline for preparing the financial resources necessary to fulfill the various responsibilities. This shows that the company is serious and creates the trust necessary for the relationship to work well.
There are different payment options that can be beneficial to both parties. These include prepayment, partial payment in advance or payment in installments.
In conclusion, negotiating payment terms with companies requires a combination of communication skills, knowledge of payment options, and understanding of relevant legal and business aspects.
