How to negotiate if customers do not accept payment methods?

Whether it's domestic or international trade, payment is a critical aspect. In cross-border trade, the amounts of money involved are generally substantial, making both parties naturally concerned about security issues. When working with a new partner, disputes over payment terms are common. So, as a foreign trade representative, how should you communicate with clients in such situations? This article will explore this topic.
 
Round One: Negotiation of Payment Terms
Typically, in the payment terms section, I include the phrase “Full payment within 7 days after signing the contract” because our products are customized, and it would be challenging to resell them if the customer decides not to purchase.
 


For first-time clients, they usually respond with: “I can't do that. It's the first time we've worked together. Paying you in full puts us at risk.” At this point, I usually let the client wait for two days, telling them that I need to seek approval from my boss and asking them to be patient. This approach is designed to make them feel that I am making an effort on their behalf. If we immediately concede to their request, they might think we have more room to negotiate and continue testing our limits.
 
After two days, I inform the client that they can make a 30% down payment, with the remaining 70% payable before shipment. Compared to the initial requirement of full payment within seven days, this is already a significant concession and is more likely to be accepted by the client. If we offer some additional incentives, most clients will agree.
 
Round Two: Requesting Better Payment Terms After Initial Cooperation
After a few transactions, the client may raise objections to the previous payment terms and request a new payment method. They might want the balance to be paid upon seeing the bill of lading scan. We cannot agree to this, so we propose a new plan: the balance to be paid within seven days after seeing the bill of lading scan, but the down payment also needs adjustment.
 
On one hand, we don't want to give in completely, leaving ourselves some room for maneuver; on the other hand, mutual benefit is essential for cooperation. Both parties need to benefit for the partnership to work. When expressing this to the client, explain the company's difficulties and how hard you worked to secure this arrangement, avoiding making concessions too easily. This approach will not only strengthen the cooperation but also make the client appreciate your efforts.
 
The final plan would be a 50% down payment, with the remaining balance payable within seven days after seeing the bill of lading scan.
 
Round Three: After One Year of Cooperation
At this stage, the cooperation is relatively stable. Unless there are significant issues, clients generally won't switch suppliers. However, both parties might occasionally hope for concessions, such as lower prices or more favorable payment terms.
 
When faced with requests for price reductions, I usually reject them outright, stating: “Despite the increase in raw material prices and labor costs, we have maintained our original pricing and have never raised our prices. Therefore, it is not feasible for us to reduce prices. The foundation of our collaboration is mutual benefit; if we have to operate at a loss, it is unsustainable in the long term.”
 
However, we cannot completely refuse the client since we don't want to lose a good customer over minor concessions. If we can't lower the price, we can offer more favorable payment terms, replying with something like, “We have always sought professional and long-term partners within the industry. Your company's expertise and reputation are highly regarded by us, making you an ideal partner for mutual cooperation and long-term success. Although there is no precedent for this, I am willing to make every effort to negotiate better cooperation terms for your company. However, I will need some time to report and apply for this with our company’s management.”
 
About a week later, I would inform the client of the new terms, explaining that, “Through our persistent efforts, we have secured a special approval for our client, adjusting the payment terms. The extended duration was due to the need for approval from our finance department as part of the special approval process. The new payment plan is......”.
 
The final concession might be a 30% down payment, with the remaining 70% payable within seven days after seeing the bill of lading scan. This is why it's essential to leave some room for negotiation in the second round. If we had revealed our bottom line in the earlier rounds, we would have no room for maneuver in this round.
 
Some might ask, “What if the client asks for further concessions after a period of cooperation?” We can set a procurement threshold, offering discounts based on the amount of purchase over the year. If we cannot meet the client’s demands, we can attribute it to company policies or the finance department.
 
Foreign trade negotiations are inherently a process of mutual give and take. However, during this process, it is crucial to clearly define and stick to your price bottom line. While ensuring your own interests, provide appropriate concessions to the client. Mutual benefit is the foundation of cooperation.