Using Cash Flow as a Sales Prospecting Tool

Everyone is looking for a discount.

Far too many salespeople are willing to give in and give a new customer a discount thinking it’s what is needed to close a sale.

Don’t get me going regarding what I think of discounting.

I hate it, as it only cheapens your value and worse yet, damages both short and long-term profitability for you and your company.

If you find yourself in a situation where you feel you have to offer a lower price to close a sale, try instead offering the customer extended payment terms.

Now this only works if your company has good cash flow and can entertain a receivable that goes beyond the norm.

For many buyers, being offered 60 or 90 days to pay versus a standard 10, 15, or 30 days can be seen as a significant benefit.

Before you make an offer like this, you need to know what their cash flow is like and what kind of value they place on money.  Finding out is easier than you think. You just have to ask.

Ask them what they look for in payment terms from customers they sell to.  Just asking them this will many times generate all of the information you need to know about how they value cash flow.

If you know they place a high value on cash flow, making an offer of paying by way of extended terms can be seen as a huge benefit.

The beauty of offering a customer extended terms to pay is you get to keep the list price the list price. This prevents the customer from seeing a lower price on an invoice, and this alone removes the problem of trying to get the price up the next time they order.

If you’re a company with good cash flow, offering a customer extended terms may only cost you a couple percentage points for a short period of time.

To the buyer, the extended terms could very well be worth much — much more if they’re working on tight cash flow.

Copyright 2012, Mark Hunter “The Sales Hunter.” Sales Motivation Blog.

 

 

 

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