Canadian businesses, like businesses anywhere else in the world, are always looking for ways to cut costs and improve overall ROI. One of the best areas to look to when you want to cut costs and improve profitability are your suppliers.

Negotiation with suppliers can be extremely valuable if you know how to do it well.

The following are some key things to keep in mind when it comes to supplier negotiation.

Analytics

First and foremost, before going into any negotiation, you need to be prepared. Equip yourself with the necessary information by looking at the analytics delivered by your invoice management system.

You want to be able to show your history as a customer, easily demonstrate your long-term value potential to vendors, and have all the data necessary to answer any questions a vendor may have during a negotiation.

With this in mind, it’s essential that competitive, forward-thinking Canadian businesses have a powerful and modern invoice management system in place, not just when it’s time to negotiate, but to make sure they’re operating with accuracy and inefficiency.

If you’re just starting a relationship with a vendor and you’re looking for the best prices, be ready to sell yourself and provide sales projections.

Research

Along with being prepared in terms of your own buying history and the value you bring as a customer, you should also get to know the supplier’s company and the market in which they operate.

You want to research the supplier, but also look at their competition and see how they stack up. This will help you go into the negotiation process being prepared to ask for what you want.

As part of your research, you need to know what actual costs are. This will make sure you’re not going too far in either direction when you’re negotiating, and you’re being realistic.

It’s Not Always About Price

While negotiating on prices is important, there are other things you can try for that will reduce your costs, without reducing the price of products.

You might be able to lower down payments as an example or get deals on shipping. You might also want to think about longer terms, which can be beneficial for cash flow purposes.

Highlight Mutual Benefits

Suppliers are in it to make money, just like your business. It’s important to respect that and work with that idea in mind when you’re negotiating.

You want to show your suppliers that you’re worth their time, that you’re trustworthy and that them partnering with you is going to bring them as many benefits as it does you.

Talk to Multiple Suppliers

Finally, you shouldn’t bluff or be dishonest when you’re negotiating with suppliers. This isn’t a one-off buying experience. If things go well you’re going to have a long relationship with them, so you need to be honest and upfront.

You should meet with at least a few suppliers to get a feel for what’s available, but don’t bluff and say this is something you’ve done if you haven’t.

Get several quotes, and you’re likely to push a more competitive mindset during negotiations.