Closing a cash-flow gap by renegotiating the terms that caused it.

Where they were

Money went out to suppliers and workers every week; money came in on whatever terms each client had been allowed to set. The gap between the two was being carried by the owner, and it was getting wider.

The owner faced the decisions that follow from that: which supplier to pay late, which worker to ask to wait, which client was too big to challenge. He had not negotiated the original terms because he had not known he could.

What we did

Six sessions, built around the live agreements rather than theory.

• Know the number first. We built a costing model so the owner knew, per contract, what the work cost to deliver and how long the business could carry it before being paid. Most of the agreements had been signed without that number in the room.
• Terms are part of the price. A contract at a good rate on ninety-day terms can be worse than a lower rate paid in thirty. We worked out the terms the business needed to stay healthy, and which clients were furthest from them.
• Prepare each conversation. For every client to be renegotiated: what they needed, what they feared, what they could concede at little cost to themselves. Then rehearsed, in the session, before the owner had the real one.
• A standard for new clients. Terms the business would accept, and terms it would not, set before the next prospect asked, so the pattern did not repeat.

Where they are now

Terms were renegotiated with existing clients and set correctly with new ones. The business kept the large majority of its clients through the process, which is the part owners fear most and the part that rarely happens when the conversation is prepared. The cash-flow gap closed. The owner now pays suppliers and workers on time from a business that is paid on time itself.

Anonymised at the client's request.