Finance Negotiation Strategies

While this might seem to be an ambitious list of financial negotiation tasks to tackle, the rapid and extensive changes in external economic conditions have made it virtually mandatory for small business owners to cut costs wherever they can. For most small businesses and manufacturers, the eight expense items shown above are an excellent starting point for any serious effort at cost cutting that will make a real contribution to the financial survival and future growth of a company.

Bank financing and services take many shapes, but a common thread is the presence of multiple fee areas in each and every form. Whether we are talking about working capital loans, commercial real estate financing or credit card processing, there will be a variety of fees. Please understand that it is reasonable for banks to make a profit from their commercial activities. But more often than not, these are negotiable charges. Because many of the fees can be viewed as excessive as they are originally quoted, the bank is likely to be left with a reasonable profit after agreeing to negotiate to a reduced amount.

If a business owner chooses not to exert any efforts at applying even minimal finance negotiation strategies when finalizing bank business loan agreements, the financial result will be similar to paying "full sticker price" (or worse) when buying a car. Automobile dealers are generally not known to offer a lower price than they have to, and it should be realized at an early point that bankers are also likely to have a "sticker price" that will be happily charged to unsuspecting commercial borrowers.

The negotiating strategy to be adopted by business owners from this perspective can be referred to as "avoid paying full sticker price for anything". No matter whether the negotiation session is with a bank or a utility or a supplier or a lawyer or a CPA, they will all typically have some variation of a "full sticker price" for their products and services. Unfortunately most banks are experiencing such a significant loss of revenue due to their recent operating mistakes that their starting point can be well above "full sticker price".

When this happens, even what appears to be a generous fee reduction can leave a business borrower still paying "full sticker price". Of course this undesired outcome can also occur with other providers such as utilities and suppliers. Because there can be some uncertainty in knowing what outcome is realistically possible, there will eventually need to be a judgment call about when to stop negotiations.