Techniques for Negotiating Payment Terms

When negotiating, do you think the big wins happen at the table? They don't! The real magic happens before the first word is spoken. Success in 80% of negotiations is due to preparation. It's taking small steps to control the process, foresee challenges, and set small goals. I coached a procurement manager stuck in a deadlock with a supplier. Both sides had drawn firm lines: • The supplier demanded upfront payments. • The procurement team refused. • They feared cash flow issues. For weeks, the talk had gone in circles. It made no progress. When I stepped in, I asked one question: “𝙒𝙝𝙖𝙩 𝙙𝙤𝙚𝙨 𝙩𝙝𝙚 𝙨𝙪𝙥𝙥𝙡𝙞𝙚𝙧 𝙧𝙚𝙖𝙡𝙡𝙮 𝙣𝙚𝙚𝙙?” The team realized the supplier's main concern wasn't money. It was to reduce delivery risks. By focusing on interests, not positions, we found a solution: 𝗔 𝘀𝗺𝗮𝗹𝗹 𝘂𝗽𝗳𝗿𝗼𝗻𝘁 𝗽𝗮𝘆𝗺𝗲𝗻𝘁, 𝗽𝗹𝘂𝘀 𝗺𝗶𝗹𝗲𝘀𝘁𝗼𝗻𝗲 𝗽𝗮𝘆𝗺𝗲𝗻𝘁𝘀 𝘁𝗶𝗲𝗱 𝘁𝗼 𝗱𝗲𝗹𝗶𝘃𝗲𝗿𝘆 𝗽𝗵𝗮𝘀𝗲𝘀. The result? The deal closed in two days, with terms that worked for both sides. That negotiation taught me this: →  Preparation isn't just logical. → It's also strategic and emotional. I'm happy to share here how I prepare for a negotiation: 𝗦𝗲𝘁 𝗦𝗠𝗔𝗥𝗧 𝗴𝗼𝗮𝗹𝘀 𝗳𝗼𝗿 𝗲𝘃𝗲𝗿𝘆 𝘀𝘁𝗮𝗴𝗲. • Be Specific, Measurable, Achievable, Relevant, and Time-bound. • No vague goals like “get the best deal,” aim for concrete outcomes: → Add a long-term partnership clause → Reduce delivery timelines by 10% → Secure flexible payment terms 𝗙𝗼𝗰𝘂𝘀 𝗼𝗻 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝘀, 𝗻𝗼𝘁 𝗽𝗼𝘀𝗶𝘁𝗶𝗼𝗻𝘀. • Ask, why does the other side want this? • When you negotiate based on interests, you create options that meet both parties’ needs. 𝗣𝗿𝗲𝘀𝗲𝗻𝘁 𝗠𝘂𝗹𝘁𝗶𝗽𝗹𝗲 𝗼𝗳𝗳𝗲𝗿𝘀 (𝗠𝗘𝗦𝗢𝘀) • Successful comes with always having options ready. For example: → Offer A: A 5% discount for upfront payments. → Offer B: Standard payment terms and extended service coverage. If you present choices, you reduce deadlock and keep control of the conversation. 𝗨𝘀𝗲 𝗘𝗺𝗼𝘁𝗶𝗼𝗻𝗮𝗹 𝗜𝗻𝘁𝗲𝗹𝗹𝗶𝗴𝗲𝗻𝗰𝗲. 𝗡𝗲𝗴𝗼𝘁𝗶𝗮𝘁𝗶𝗼𝗻 𝗶𝘀𝗻'𝘁 𝗷𝘂𝘀𝘁 𝗹𝗼𝗴𝗶𝗰—𝗶𝘁'𝘀 𝗮𝗯𝗼𝘂𝘁 𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗶𝗼𝗻. • Practice self-awareness to stay composed under pressure. • Show empathy to build trust. • Use "Feel, Felt, Found" on objections, and it'll guide decisions. Negotiation is like a dance. Both sides need to move in sync, adjusting their steps as they go, to create a harmonious outcome. And the best dances are choreographed long before the music starts. So, what’s been your biggest negotiation breakthrough? Have you ever unlocked a deal by shifting focus from demands to solutions? Found success by preparing better than your counterpart? Drop your story in the comments—I’d love to hear it. Or DM me if this resonates with a challenge you’re navigating. Let’s talk about what works.

One of the BIGGEST assumptions I see Web Designers and Developers make: - They believe payment terms are non-negotiable. - They think everything the client says has to be accepted. Just recently, I was on a call with Priya. She’s a web developer who helps big brands with landing pages. Her clients? Big brands with even bigger payment cycles - Net 60, Net 90, sometimes worse. The work was flowing in, but the cash? Barely trickling. Priya was: • Dipping into her savings to cover software subscriptions. • Struggling to pay her assistant. • Stressing over overdue invoices. One evening, after chasing yet another late payment, she’d had enough. She called me and said: “Why am I financing my client’s business? This doesn’t work for me.” On our call, I told her something that changed everything: "You know you can just ask for upfront payment, right?" Priya hesitated. Like most freelancers, she’d assumed pushing back on payment terms would scare clients away. But she decided to try anyway. The next time a client sent over their standard "Net 60" terms, Priya pushed back. Not aggressively. Not with ultimatums. She simply said: “I’d love to work with you. To ensure the project runs smoothly, I’d like to request 30% upfront and milestone-based payments every two weeks. Does that work for you?” The result? The client agreed - without hesitation. And just like that, Priya took control of her payment terms. But you know what's surprising? Priya’s initial approach isn’t uncommon. Most businesses accept client payment terms as non-negotiable because: • They think it’s “just how things are done.” • They’re afraid of coming across as difficult. • They assume pushing back will cost them the project. But here’s the reality: Payment terms are negotiable. And failing to negotiate can lead to: 1. Delayed payments that force you to cover costs out of pocket 2. You absorb all the risk - meaning, you are gambling on the client paying later 3. Net 60 or Net 90 terms leave you juggling finances or dipping into reserves. 4. You are overall sending the wrong message to the client Now there's 4 steps I suggest you take to fix this. Step 1 - Ask for Upfront Payments A 20–50% deposit is fair and protects you financially. Step 2 - Break Payments into Milestones Tie payments to project progress to avoid waiting until the end. Step 3 - Negotiate Shorter Payment Cycles Counter long terms with partial prepayments to bridge the gap. Step 4 - Be Professional, Not Demanding Frame your terms as a way to ensure a smooth project. Remember payment terms are not just random numbers, they’re the very foundation of your business. Negotiate. Set boundaries. Protect your business. Because a well-run business isn’t just about great work - it’s about getting paid fairly and on time. —— 📌 If you need my help with drafting custom contracts for your high-ticket projects, then DM me "Contract". #Startups #Founders #Contract #Law #Business

From studying finance in my MBA to practicing law, one lesson stands out: contracts aren’t neutral. They can be working capital generators or cash flow killers. The truth is, contract clauses shape far more of your financials than most people realize. Get them wrong, and you bleed cash. Get them right, and they actively strengthen your financial position. #1: The Cash Flow Killer - Aggressive Payment Terms "Payment due within 15 days of invoice." Looks fine, until you realize it clashes with your 45-day customer payment cycle. One manufacturer learned this the hard way: 15-day vendor terms forced them into a $500K credit line just to cover timing gaps. Quick fixes – • Negotiate payment terms that match your cash conversion cycle • Add early payment discounts (2/10 net 30) to create optionality when cash is flush • Build in seasonal payment adjustments if your business has cyclical cash flows #2: The Auto-Renewal Trap That Holds Your Budget Hostage "Contract auto-renews for successive one-year terms unless terminated with 90 days' notice." Miss the deadline by a single day, and you’re locked in for another year. I’ve seen companies budget for exits in Q4, only to miss November deadlines and carry unwanted costs well into the next year. Protection strategies: • Cap auto-renewal to 30-day notice periods for contracts under $50K annually (adjust according to your unique situation) • Include mid-term termination rights for material budget changes • Add "convenience termination" clauses where possible • Build in annual spend review meetings with mutual adjustment rights #3: Unlimited Liability - The Balance Sheet Bomb " Each party shall indemnify the other for any losses arising from breach of this agreement." Sounds balanced, until “any losses” means regulatory fines, lawsuits, or data breaches. One logistics company signed this and saw a $30K software project balloon into $1.2M liability after a vendor breach. Protection strategies: • Require mutual indemnification where the commerce lends credence—don't be the only party at risk • Exclude consequential damages from indemnity obligations • Carve out gross negligence and willful misconduct from caps #4: Service Level Penalties That Exceed Contract Value "5% of monthly fees per day of downtime." Seems fair, until 20 bad days wipe out 100% of monthly fees, while your real damages often exceed contract value. Better structure: • Graduated penalties: e.g. 1% for first violation, scaling up for repeat failures • Cap total penalties, e.g., at 50% of annual contract value • Include service credits instead of cash penalties where possible Almost every contract is a financial instrument. Treat it that way. with the same rigor you’d apply to any financial decision. #Contracts #LegalTech #Finance #WorkingCapital #CashFlow #GeneralCounsel #RiskManagement #MBAPerspective #BusinessStrategy #CorporateLaw

How I lost ₦2.5 million to a "trusted" client I randomly stumbled on a conversation from 2024 with a client who owed me $1,800. That's roughly ₦2.5 million in Nigerian currency. Here's the story: This was a long-term partnership client. We had a solid relationship built over time. He'd already paid me substantial sums on previous projects. I assumed we were good. On his final project, I got comfortable. Too comfortable. I didn't ask for a contract. I didn't ask for upfront payment. I just delivered the work, trusting that our relationship meant something. Two months later: Silence. Ghosted. The money never came. I reached out severally. Nothing. The hard lesson: A good relationship doesn't replace a contract. Trust doesn't replace payment terms. History doesn't guarantee professionalism. People change. Circumstances change. What felt like loyalty yesterday can disappear tomorrow. So here's what I do now: 1. Always sign a contract No exceptions. No matter how well you know the client. A contract protects both parties and clarifies expectations. 2. Get upfront payment Depending on project scope: 30%, 50%, or full payment before you start. This ensures commitment from both sides and protects your time. 3. Never let relationship override business The best relationships are built on clear boundaries and professional standards, not assumptions. You can have a great relationship AND maintain strict business practices. In fact, the professional ones respect it more. Don't be nice at the expense of your business.

7 tips for getting paid…every time… I've seen more and more comments about not getting paid recently. Mostly from small business owners struggling. One of our larger customers also recently got quite upset with us. We refused to confirm service dates when payment was weeks late. Like we were the bad guys. In the west we have this ingrained expectation, that 'standard' payment terms means 30 days credit. We deliver our value, Then ensues the never-ending chasing. Larger organisations impose the idea, Behaving as though this is the only option. It leaves many struggling when cash flow is tight. Here are my top tips for getting paid, every time. 1. Set your terms and get paid upfront, in advance of delivery. It doesn't matter how much you're charging. We receive advances from £50 to £500k regularly without question. It's about expectations and positioning. If your offer is compelling and your customers need what you sell, they will pay. 2. Don't extend credit, ever (see point 1). You don't need to. There's no law, rule or requirement. If your customers want what you have, they will pay in advance. 30-day credit is the same as giving them a bank loan. You're not a bank. In the rare cases we've extended finance for sound commercial (project funding) reasons - we charge interest and insure the credit. 3. Don't deliver anything, agree service dates, start manufacturing, or provide access to materials until payment terms have been met. You aren't a charity, and your time is precious. If another customer wants the slot before you get paid, give it to them. 4. Have a non-negotiable collection policy written into your terms. Charge late payment interest from 1 day over and use a no-win, no-fee collection agency on day 7. Reasonable time is fair. After that, stop at nothing. 5. Never be bullied by or think that a big company employee saying "that's what our terms are" means anything. It doesn’t. ALL companies can make payments if the relevant people make the decision. If your contact can't do that, they’re irrelevant, find out who can. 6. There are plenty of customers out there. If you compromise, you will spend a lot of time that could be focused on other customers. If they don’t respect you enough to cough up, they’ll probably be bad customers. Replace them. 7. Make sure your customers know before they sign up. Make it clear in contracts, on sales pages, quotations and confirmations. If legal get involved in contract reviews, remind your contact that payment is a commercial decision, legal are irrelevant here. If all of this sound tough, remember your worth. If you can really help people. Your message and offer are strong. You are worth paying. If you’re worried about losing business? The problem is not with payment. It’s that you’re not getting enough customers. Your offer and message aren’t hitting home. Marketing and sales processes not working. That’s for another day…

A client told us they'll only pay 90 days after our service was delivered - "it's standard in our company". It was a big deal. But it would cripple our cash flow. We deliver and pay our team today, then wait 3 months to get paid? Huge red flags. Without enough cash in the bank - salaries, rent, our expenses were at risk. So we took a tough call. Said no. And this isn't the only contract trap I've seen. Here are the 4 clauses that can kill your business if you're not careful: 1. Extended payment terms (Net 60/90/120+) ↳ Client wants 60-120 days to pay after you send the invoice.  You pay your team today. Client pays you 2-4 months later. ↳ How to handle it: Negotiate down to Net 30. Take 50% upfront. Or increase your rate by 10–20% to cover the cost of delayed cashflow. 2. Unlimited Revisions ↳ "You'll keep revising till we're happy, right?"  A $3,000 project becomes 47 revisions and 60 hours of unpaid labour. ↳ How to handle it: Cap revisions at 2-3 rounds in the contract. After that, charge per revision or per hour. 3. "We'll pay you when our client pays us" ↳ Your payment depends on a person you’ve never met. Their client delays → you don’t get paid. ↳ How to handle it: Simply say no. This is 100% a deal-breaker. 4. One-Sided IP and Liability ↳ Two problems here: They own all your work even if they don't pay. AND you're liable for everything that goes wrong. ↳ How to handle it: Add TWO clauses.  First: "IP transfers only upon full payment."  Second: "Service provider's liability is limited to the project value.” 5. NDAs that don't allow any disclosure ↳ If you do great work for them, but can't include it in your portfolio, it's worth a lot less to you. ↳ Mention that though the work is your client's IP, you're allowed to use in your portfolio for promotion. Every clause is negotiable. But ONLY before you sign. After that, you lose all leverage. Your services have value. Your agency isn't desperate. And your contract should reflect that. What's the worst contract term you've ever seen? #contracts #legal #founders #business

Last year, I received a message from a UAE-based CFO. He was candid: "Nabeel, we’re solvent but strained. Liquidity’s tight. Vendors are pressing. Salaries are due. I’m firefighting daily. Help me find a job." I said, “Hold your horses, man. Let me help you turn the situation around. Let’s start with diagnostics, and then I’ll advise you on corrective actions.” 1. Diagnose Revenue Leaks and Collection Bottlenecks Before prescribing, I always start with a forensic review: - Aging reports: Segment receivables by customer type, geography, and payment behavior. - Sales contracts: Identify weak clauses, vague payment terms, or discounts without accountability. - Revenue mix analysis: Spot low-margin products or services dragging down profitability. - Customer churn and retention metrics: Understand where value is leaking silently. 2. Rebuild Commercial Discipline - Tighten payment terms: Shift from 60-day norms to 30-day targets where possible. - Introduce early payment incentives: Offer small discounts for upfront payments, especially to high-volume clients. - Enforce credit limits: No new sales to overdue accounts unless cleared by finance. - Automate dunning and reminders: Use CRM-integrated workflows to chase payments without manual fatigue. 3. Partner with Sales, Don’t Police Them - CFOs must co-own revenue, not just report it. - Sit with sales heads weekly to review pipeline, pricing, and payment risks. - Build dashboards that show not just revenue booked, but cash collected. 4. Monetize Underutilized Assets - Review inventory, IP, licenses, and partnerships for monetization opportunities. - In one turnaround, we converted dormant licenses into prepaid consulting packages, boosting cash flow by 18% in one quarter. 5. Segment Customers by Strategic Value - Tier A: High-value, timely payers → nurture and reward. - Tier B: Volume-driven but slow payers → renegotiate terms. - Tier C: Chronic defaulters → consider exit or prepayment-only terms. 6. Align Internal Incentives - Link sales commissions to collections, not just bookings. - Reward account managers who reduce DSO (Days Sales Outstanding). - Make finance a visible partner in commercial success, not just a back-office gatekeeper. 7. And many other strategic actions that Finance can initiate. Fast forward to last week, at the CFO Conference MENA 2025 last week, the same UAE-based CFO who once messaged me in crisis shared how these steps, especially customer segmentation and incentive realignment, helped him reduce DSO by 22 days and unlock over AED 30 million in working capital. "Let’s talk further to scale the business." Sometimes, the best #liquidity #strategy isn’t external #funding. It’s internal discipline, powered by strategic finance. A small tip for #entrepreneurs: To win business, you must first build trust. And to build trust, you must prove your skill by adding real value (may be pro bono). Business will flow to you automatically.

I had a client with a NET65 payment schedule. 65 only denotes the aging period of the invoice. I wasn't paid until day 70!!! 70 days after the work was reviewed, submitted, and actively being leveraged by that company with their clients. They continued business as usual and I was forced to stretch my dollars. BUT for solopreneurs, this leads to hundreds of dollars in late fees piled up because cash flow was nonexistent.You also have to contend with lack of sleep and focus because your mental energy is diverted to finding ways to fill in the payment gap. So now instead of growing your craft you're forced to expand your pipeline, take on more work, or dip into other resources to make ends meet. It's interesting that these same companies will waive liability insurance requirements but won't shorten payment schedules. NET30, NET60, NET90 terms were built for vendors with finance teams, credit lines, and cash reserves. Solopreneurs and small businesses are not structured that way. Our pipeline is not consistent. So to combat this I started negotiating bi-weekly invoicing and NET15 or less directly into my contracts. Every month now 75% or more of my clients are on this schedule and I have an invoice paid every 2 weeks. Prior to this I would have less than 25% on this setup. In order to maintain your business you have to negotiate what keeps you in the black. You won't get every client on this structure but if you can get some, you shift the tides more in your favor. It's hard out here and nobody is going to advocate for your cash flow except YOU. So let's stop stretching dollars and instill a system that works for YOU.

Unlocking Revenue Growth: How In-House Lawyers Can Drive Cash Flow with Contracts Traditionally, in-house legal teams are seen as cost centers—essential for risk management but not necessarily revenue generators. But what if I told you that your contracts could be a powerful tool for increasing cash flow and accelerating revenue? By strategically managing accounts receivable (AR) and accounts payable (AP) through contract terms, in-house lawyers can directly impact the company’s bottom line. Here’s how: 1. Faster Payments = More Cash on Hand 🔹 Tighten Payment Terms – Reduce standard net-60 or net-90 terms to net-30 (or even shorter where possible). 🔹 Enforce Late Payment Penalties – Ensure contracts have interest clauses for overdue invoices. 🔹 Define Clear Invoicing Processes – Ambiguity leads to disputes and delays—spell out invoicing requirements clearly. 2. Smart Payables = Improved Cash Flow 🔹 Negotiate Extended Payment Terms – Secure longer payment periods with suppliers to optimize working capital. 🔹 Early Payment Discounts – Structure contracts to allow strategic early payments for discounts, balancing cash flow needs. 🔹 Automate Payment Triggers – Use contract automation to ensure payments align with revenue inflows. 3. Mitigate Revenue Leakage & Strengthen Collections 🔹 Audit Payment Compliance – Ensure customers stick to agreed payment terms through regular AR reviews. 🔹 Strengthen Termination & Default Clauses – Protect against non-payment scenarios with strong legal protections. 🔹 Align with Finance – Work closely with finance teams to review contractual obligations affecting cash flow. Key Takeaway Contracts aren’t just risk management tools—they’re levers for revenue growth and financial efficiency. In-house lawyers who master this shift from cost center to value creator, proving legal’s role as a strategic business driver. What’s one way your legal team has improved cash flow or revenue through contracts? Let’s discuss! ⬇️