Negotiating B2B contracts is a regular activity, both sides want to get the best deal possible. By negotiating you can achieve a contract that is fair, reasonable and beneficial to both parties - even helping to boost company profitability and improve goodwill and collaboration between trading partners.
In order to do this, most businesses will have a highly skilled team dedicated to reaching the best deal for their organisation. Savvy contract negotiating skills are a real plus when entering into any type of deal with another business. These skills can lead to satisfactory contract terms, which help you to realize greater benefits. Consider these tips to get the best terms when negotiating your next deal.
Have real-time knowledge of your deals
DealTrack includes net and net-net pricing analysis which gives you a real-time view of relevant information that enables fact-based decision making when negotiating contracts for the company. This also has the added benefit of enhancing financial modelling from the purchasing team to the finance team.
Any deal management system should include a fully accessible deal library which has all the essential information that is needed stored in one central place providing accurate data to negotiate contracts with. By having access to this, contract negotiators can model their deals and pull purchase data from branches or members. This centralised system can also provide insight into group purchasing and help to rationalise buying.
Clearly state your deal terms
The whole point of contract negotiation is that both sides go back and forth until they come to a satisfactory trading agreement. Try to always put everything you want out of the deal on the table, even if you know you may not get it all. It never hurts to ask because you may end up getting exactly what you want. The other party is going to evaluate each request and determine if it is something they can or cannot do. B2B deals are supposed to be mutually beneficial, having a hidden agenda can lead to poor relationships.
Give your trading partners repeat business
Suppliers want to sell as many products as they can and appreciate businesses who order a lot of product from them which will help them reach their business goals. When negotiating contracts, make sure they know that your business will give them repeat business, over the long term. If you have a track record of past purchases, let them know how much business they can expect from you based on those purchases.
Form a strong business relationship with your trading partners
If you’re reached the negotiation stage with your trading partner, then it’s highly likely that both parties believe there is a deal to be done and benefits to be gained. Having a mindset of collaboration to achieve this will go a long way to making sure the negotiation is successful.
Firstly, always begin negotiating contracts with transparency and trust. Predicting and researching the other trading partners needs before the contract negotiation simplifies the process and creates a strong foundation for a lasting relationship.
You may currently rely on emails and offline documents which can be confusing and cause costly mistakes, but to provide visibility for both sides a rebate management system would be beneficial. By implementing a system, that your suppliers can have access to; the transparency of each deal is clear from the off. As a result, when negotiating contracts with suppliers on the next deal, your working relationship is likely to be strong simply based on the clarity you can offer on all of the details related to rebates. A central view will also decrease the number of disputes, making your relationship with your trading partner less confrontational and more focussed.
Also, the visibility itself improves supplier relationships as scaled or tiered rebates are in place for incremental sales increases. For example, buyers can view the next tier in a rebate program and evaluate the potential benefit of additional end of-period purchases. Salespeople can then encourage customers to make additional purchases so the next level of the rebate can be realised. With strong relationships, visibility and honesty, some trading partners may even allow you to adjust the tiers and realise higher benefit than expected.
Implement an automated workflow for signing off deals
As the number of contracts with your trading partners grow, it’s imperative that contracts save time, not consume more of it. By having an automated workflow, you can automatically invite the required users to approve or reject your proposals in order to ensure it has been reviewed and signed off by the correct people before it is activated to a trading agreement.
This in turn nurtures your supplier relationships, makes contract agreements seamless and significantly speeds up the process for every party involved. You also should have an audit trail which you can look back on.
With DealTrack for example, you can invite your suppliers to review and sign-off deals. Users can only see workflow information for the trading agreements that are relevant to them. There is also an approvals page for each trading agreement from which users can see all steps in the workflow process.
The solution – a rebate management system
As you can see above our rebate management solution DealTrack can manage complex trade agreements and automate a streamlined process that ensures a company is reaping all the benefits once their purchasing teams have closed a deal.
If you follow our advice, you’re highly likely to have more positive outcomes with your contract negotiations and have a more thorough understanding of the businesses that you have contracts with. Lets try to stop thinking of negotiations as adversarial competitions, trying to outdo our trading partner, and instead think of them as a collaborative way to achieve reliable growth, nurturing trading relationships for the future.