It is possible that you may need to free up funds in order to launch a new product. Changing your payment terms may be necessary if you wish to expand your company’s operations. For the duration of COVID-19, it is possible that you may experience financial challenges. It is beneficial for a small business to negotiate better payment terms with its vendors and business partners for a number of different reasons. Vendors may agree to extend your payment terms if your concerns are addressed satisfactorily.
Sample Emails Requesting Extended Payment Terms
EXAMPLE 1
Dear partner, Concerning the current unpleasant situation with Covid-19, I would like to ask you if you could extend the payment terms for our company from 30 days to 90 days. We are also dependent on external 3rd parties and therefore extended payment terms from your side will help our business. We hope you will give this proposal your kind consideration and look forward to your reply. Best wishes, Kim
EXAMPLE 2
Hi Steven, As your partner for a long time, we would like to ask you to extend the payment terms for our company from 30 to 60 days. In recent weeks we have been experiencing difficulties collecting the payments from our customers due to the current external circumstances and would like you to extend our payment period. Thank you in advance for considering my request. Yours sincerely, Peter
EXAMPLE 3
Dear valued partner, Our usual terms of payment are 30 days net. Could you please allow us 2 months’ credit? Concerning our long-term successful partnership, we hope you will consider our request as soon as possible. Yours faithfully, Sarah
EXAMPLE 4
Dear partner, I refer to you regarding our conditions of payment. Our terms are 60 days net, but would you allow us 3 months’ credit for subsequent orders? Our request arose concerning the current circumstances with Covid-19. As before, we want to pay our invoices on time and wouldn’t like to be late, so an extension of the payment terms will ensure a smooth payment process. Yours truly, John
Short Sample Emails
We would be grateful if you could allow us 2 months’ credit.
Would it be possible for you to extend the payment terms from 30 days to 90 days?
We would highly appreciate it if you extend our payment terms to 60 days net?
Tips
Make a list of all of your questions before contacting suppliers. According to Stephanie Sims of Finance-Ability, entrepreneurs should start with a simple cash flow assessment to establish the best payment arrangements.
Before approaching a seller to enquire for longer payment terms, make a plan of action. Understanding your present budget is crucial. This method will help you start discussions. Examine the rights in your contract as well. Payment penalties should be considered for late cancellations and missed deadlines. Getting legal advice before working with your vendor is a good idea.
Small and medium-sized enterprises account for more than 95% of all businesses in the United Kingdom (SMEs).
It’s hardly unexpected that when the economy improves, many firms look for ways to prolong their payment terms.
Negotiating payment terms with suppliers may be advantageous when it comes to managing short-term cash flow.
This is how and when you pay businesses that supply you with services, as well as how much time you have to pay for their services.
When you make an order, you are usually signaling the start of the procedure.
With the exception of the smallest transactions, all purchases are made in advance. In other cases, a payment may be expected in a matter of days, weeks, or even months.
If you want anything produced just for you, you will almost probably have to pay in installments. A down payment might be the first stage, followed by additional payments and, eventually, delivery.
Customers seldom bargain over the most fundamental terms and conditions. As a consequence, it is advantageous to study them during these tough times.
By analyzing your options, consider how you might be able to negotiate a better deal with a longer payment time.
Consider the manner of payment before just accepting the terms of a new provider.
They are more prepared to accept lengthier payment terms because of their size as well as the frequent 90- or 120-day payment intervals.
Inform the other person about your financial situation and clarify that you are merely looking for a monetary boost.
Assist them in forming new ties with customers and business partners.
A longer payment term might be exchanged for a particular number of purchases or a certain amount spent with them.
In business, effective communication is critical. Identifying the relevant person at a supplier, speaking their language, and grasping their challenges is a vital component of the process.
Assure them that they are not being singled out in this assessment of their capacity to make timely payments.
