Success story: Improving credit terms with service providers.
Objective: The main objective of this action was to review and improve existing credit conditions with the company’s service providers. Therefore, to achieve this, we set out to:
– Negotiate better credit conditions with suppliers, adjusting them to the new business reality.
– Obtain agreements with the most appropriate service providers, based on the company’s business volume.
– Reduce the pressure on cash flow, optimizing payments and invoicing periods.
Context in which the actions took place: The company was affected by a major change in its shareholder structure. It ceased to be part of a large business group and became an independent entity. Certainly, this transition created several specific situations:
– Inherited credit terms: many suppliers had established their terms when the company was still a subsidiary of the group. However, this meant that they were not in line with their new operating reality.
– Lack of documentation: There was no clear record of the agreements reached with suppliers, which made it difficult to renegotiate or validate them.
– Advance payments: In some cases, the company was forced to pay for services in advance or in cash.
– Low season and liquidity strains: The company whose business was seasonal, went through a period of low activity. Precisely, it had pressing cash flow problems.
Actions we took: To address this situation, we implemented an action plan structured in several phases:
- Market research: We analyzed current market conditions for similar companies in terms of industry and size, to obtain comparable references.
- Review of contracts and agreements: We examined in detail the existing contracts to understand the agreed conditions, their validity, and points of renegotiation.
- Billing analysis: We evaluated the evolution of the invoice volume with each supplier, identifying areas for improvement in the agreements based on commercial history.
- Development of modification proposals: We designed proposals to adjust existing credit conditions and, when no formal agreement existed, we had to establish brand-new terms.
- Negotiation with suppliers: We initiated a process of dialogue with each service provider, presenting our options with solid arguments based on comparative analysis and the previous commercial relationship.
Challenges we had to overcome: The negotiation process encountered several obstacles that we had to overcome in a practical manner:
– Inertia in commercial relationships: The company had been collaborating with the same suppliers for years. Consequently, this habit generated resistance to change on all sides.
– Previous commitments: Some agreements had been agreed directly by the former parent company, which meant that the company had not formmaly approved as such the conditions applied up to that time.
– Lack of detailed information: In many cases, it was difficult to access basic data on the commercial relationship. Furthermore, documentary reconstruction and validation work with suppliers was required.
Constraints we had to respect: During the process, we had to consider certain restrictions that could not be ignored:
– Ingrained business customs and habits: The company had long-established practices that influenced the way it managed its suppliers.
– Respect for existing contracts: Some recent agreements limited renegotiation options in certain cases.
– Maintaining quality standards: Any change in supplier conditions should not negatively affect the quality of the services provided.
Results achieved: The actions implemented resulted in substantial improvements not only in the payment structure but also in the relationship with suppliers. In this case, among the achievements obtained, the following stand out:
– Extension of credit terms: Payment terms were extended, allowing for better cash management.
– Reduction of guarantees required: The amounts deposited or pledged as payment performance bonds were reduced. In addition, prepayments were also eliminated in most cases.
– Optimization of suppliers: Some service providers were changed without affecting the operation or the quality of the services received.
– Creation of a follow-up system: We implemented a mechanism to continuously monitor the agreed conditions and ensure compliance over time.
Demonstrated competencies: This process demonstrated the importance of planning to optimize company performance. On the other hand, it showed our qualities in several key areas of business negotiation:
– Contractual analysis skills: we were able to evaluate and renegotiate complex contractual conditions to the benefit of the company.
– Ability to unblock unfavorable situations: We overcame obsolete payment structures that had been entrenched for years.
– Building trust and credibility: We were able to transmit security and professional solvency, strengthening the relationship with suppliers and establishing fluid communication.
This success story demonstrates how a well-structured negotiation based on detailed analysis can end improving credit terms with service providers. In addition to transforming the financial situation of a company, improving its cash flow. Finally ensuring more balanced and sustainable trade relations in the long term.
