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Effective negotiations with the supplier
12.05.2014 45185

Effective negotiations with the supplier

It is not at all necessary to be a skilled orator so as to negotiate for yourself particularly favorable conditions for the supply of goods, knock out a tangible discount or get other pleasant concessions. Vladimir Fokin, a lawyer with 15 years of experience and managing partner of the law firm Fokin and Partners, talks about how to negotiate with a supplier without the gift of a diplomat.

Small but interesting Despite the fact that suppliers most often prefer to work with large companies, small enterprises have their own advantages. And it is on them that it is worth paying the attention of a potential partner during negotiations. One of these advantages is stability: during the crisis, wholesale companies survive mainly not at the expense of large customers, who begin to cut budgets in difficult times, but at the expense of small stores that have, although not outstanding, but stable purchases. Reliability is expensive, so reassure the supplier that you can provide it. The owner of the only store in the village in this sense has a easier time, because his shoes will always be bought and under any economic conditions. But what are the competitive advantages of stores that compete with many other similar ones in the city? A brisk place, an impressive base of regular customers, a long history, special orders from city enterprises - this, as well as an original approach to attracting customers, can create the image of a valuable and reliable partner in the eyes of the supplier. Agree that the phrase “we have a shoe store” does not sound as attractive to the supplier as the phrase “we have a shoe store in which customers receive a free style consultation on a weekly basis”.
In order not to be unfounded, take along with you the part of the business plan that reflects the competitive advantages of the store - be it a profitable environment, the specifics of the assortment or the loyalty program.

If the priority of the supplier is still not the reliability of the store, but the volume of orders, you can go the other way. Collective purchases have become quite popular recently, when several owners of small stores from different cities temporarily join together to place an order with a good discount from a supplier. In this case, it is desirable that the supplier saw only one entrepreneur, so a similar transaction can be made as follows. A commission agreement is drawn up between the selected entrepreneur and the other procurement participants, according to which this entrepreneur (commission agent) undertakes, on behalf of other companies (committees), to complete the transaction on its own behalf, but at the expense of the principal. Participating committees transfer advance funds to him, and in return receive goods that belong to them, and not to the entrepreneur representing them. On a large scale, such collective purchases are conducted through a specially created intermediary legal entity, which acts as an operator for a symbolic fee, without which a commission agreement cannot be concluded. The organization of a separate purchasing company can also be dictated by tax security considerations.

Good bid

The art of negotiation is to interest the other side and offer, in exchange for material benefits, something that for you does not have special value or is not difficult to perform. For example, you can tell a partner that you want to sign a contract with him for 5 years and make him the general supplier of your store. This wording does not change the meaning of the transaction for the store owner and does not cost him anything, but for the supplier it looks like a blessing. You can apply another psychological trick - to mention long periods and large numbers. The fact is that an ordinary employee thinks within one, a maximum of three to four months, and the amount that the company can bring cooperation with your store in five years will sound much more impressive than the amount for a month or six months, even if the price of the issue remains unchanged.

Another secret of successful negotiations: tough conditions and difficult requirements from the counterparty can be weakened by exchange. For example, in response to a request for full prepayment, try to still offer a partial payment system, but in exchange for this relief promise the supplier a company shelf in the store, active promotion by sellers of his goods, or other good that is not too difficult to implement. However, remember: no matter what favorable conditions you are ready to offer the supplier, in no case do not inform them all at once. It’s better to save them until the moment of bidding, when for each good for the supplier it will be possible to get one favorable condition for you.

Companies that cannot yet offer something unique because of their recent existence can be advised by the principle of Tom Sawyer, who arranged a whole competition from an unattractive lesson. This “fence principle” works especially well with male managers who have a competitive spirit in their blood. In particular, you can tell the counterparty that you have a very serious approach to suppliers, and at the moment of the large number of manufacturers you choose only 5 companies that you will work with in the future. The phrase sounded seems to imply that the selected five will receive special conditions, which means that the counterparty will not leave it unattended.

When exchanging goods for favorable conditions for yourself, do not lose sight of the principal points: for example, you should insist on the procurement mechanism for applications and agree that you should not be pressured by the deadlines. With a special desire, you can get other concessions. For example, such:

· Discount: do not hesitate to ask what maximum discount you can get by meeting the various requirements of the supplier. It is not at all necessary to fulfill all of the above conditions, because you can always offer something no less interesting to your partner and beneficial to you. The size of discounts can reach 50%, however, such a discount is usually obtained for large volumes or long-term contracts (from 3 years).

· Deferral of payment: it is difficult for a small store to work under a supply contract, therefore it is advisable to agree on a commission agreement in which the goods, together with the associated risks, do not actually belong to the seller. If the supplier does not agree to work under the commission agreement (although it is also beneficial for him from the point of view of accounting), agree at least on an 2-month deferred payment, and ideally on one that would allow you to pay for the goods from the actual revenue.

· The procedure for the return of trade balances or exchange: having received the consent of the supplier to conclude a commission agreement, you should ensure yourself the right to return trade balances. But if the supplier does not want to fulfill this condition, it is possible to agree on the exchange of trade balances for other products. A similar mechanism can be taken into account in the supply agreement, however, in this case, a separate clause should specify the moment of transfer of ownership from the supplier to the buyer, for example, after payment of the goods, which is especially beneficial if a delay is received before the start of the trading season. (For more information on how to stipulate conditions favorable for the store owner to work with the supplier in the contract, see the article “Laying straws: how to transfer risks to the supplier”, published in Shoes Report No. 107).

· Promotional materials: this is an optional but pleasant addition to any transaction, which would be nice to get for free at least in the form of videos or posters. However, in the ideal case, you can always strive to ensure that suppliers provide the store with branded spoons, banquets or other useful things. If the supplier does not agree to help you promote your products free of charge, you can try to “exchange” advertising materials for promotions or other benefits, or at least agree on a substantial discount.

Appearances and passwords

Legal practice shows that as a result of negotiations, you can get into situations that do not promise the store owner anything good. To protect yourself from fraud or risk, follow simple safety rules. Before starting negotiations, politely ask the counterparty for a power of attorney or other document certifying the right of this particular employee to negotiate on behalf of the company. It happens that negotiations are conducted by a person who legally does not have the right to negotiate special conditions with customers, and the latter, as a result, turns into problems. In addition, do everything possible to save yourself from the excessive interest of the tax inspectorate in the future - it will be provided to you if you find yourself a partner of a one-day company or a company convicted of cashing out funds. You should be especially wary of companies that act as intermediaries of a Russian, and often foreign, company in negotiations, and offer details of an unknown company. The precautionary measures in this case are as follows: collect in a separate folder all the documents about the intermediary and the provider itself, which you should still meet in person. If possible, ask the company for a copy of the registration certificate, TIN, PSRN, a copy of the charter, a copy of the order for the appointment of the Director General. Also store in the business card folder the persons with whom you negotiated, contacts, meeting addresses and even receipts from business dinners. If negotiations take place in another city, arrange a business trip in bookkeeping, saving tickets, hotel reservations and compiling a business trip report. If the acquaintance with the supplier took place at the exhibition, be sure to mention it in the report on the visit to the exhibition and take some photos of the company's booth. At first glance, it seems that these precautions are only paranoid, but they will not be redundant if the tax nevertheless comes to you with a check in the case of “bushes” from one-day firms. Law enforcement agencies have an accusative bias of thinking: "if we came to you, it means that you are already to blame." It often turns out that a daddy with a full dossier on the supplier seriously cools the ardor and reduces the unhealthy interest of those who inspect an honest partner.

In large companies, the practice of regulating the verification and conclusion of civil contracts is widespread. Such a regulation would also be useful to any entrepreneur, however, it is important that a lawyer compose it, since there are simply no high-quality documents of this type in the public domain. The meaning of the regulation is to legalize the requirement for the supplier to present documents: in case the partner refuses to show the charter or issue a copy of the decree on the appointment of the general director, the contract is simply not concluded, and for a justified reason.

At the time of signing the contract, observe other precautions: check the texts of the contracts in advance; do not sign anything without first learning; check all two or three texts of the contract for identity; flash each contract with a paper seal and seal on each page to which contract it belongs. All these recommendations are due to sad reality, because sometimes it happens that copies of contracts are different, and the buyer loses his profitable copy of the contract. Or so that before the negotiations an old version that is not favorable to the seller is printed by mistake. In these cases, you have to rely only on the integrity of the supplier, but it is always better when faith in honesty is supported by the letter of the law.

It is not at all necessary to be a skilled orator so as to negotiate for yourself particularly favorable conditions for the supply of goods, knock out a tangible discount or get other pleasant concessions. About,…
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