The Great Debate is underway: daylight savings time — should we or shouldn’t we? This debate comes up twice a year, although it seems that we’re a little more passionate about it when we lose daylight than when we gain it. Regardless, this time of year is not only a good reminder to reset the clocks and change the batteries in your smoke detectors, but also for dealmakers to refine their use of time in negotiations.
Believe it or not, time is one of the most overlooked variables in a negotiation. We tend to focus merely on the start and end of contracts, or the length of terms, but there are so many other non-visible time variables that can be very useful. With every change in a time variable, think about how other variables are impacted as well. Here are some of our favorites:
Length of contract. We have to start here, because it’s so obvious. Sometimes changing the length of an agreement can shift the dynamics of a deal.
Terms. Getting paid sooner or later is always a discussion. As they say, “time is money.” Maybe you’re willing to give discounts for getting paid sooner, or you might ask for deposits in order to allow someone to pay later.
Deferral. You might consent to a demand from the other party if something within the agreement is deferred to a later date. For instance, deferring price increases or penalties incurred.
Invoice timing. Terms are about when someone gets paid, but there are also opportunities to discuss when someone is billed. You might be more or less flexible about when something is invoiced. For example, invoicing at the point of order, or on delivery, or when the sale happens, etc.
Notice/cancellation periods. Many contracts have notice or cancellation periods that can be negotiated. The other side might be more flexible regarding other terms if notice or cancellations are more beneficial to them.
Deadlines. During a negotiation, deadlines for when decisions must be made or when deals must be done are means by which pressure might be applied. But deadlines can also be used to ensure that certain things happen during a deal. For instance, one party might have to complete something by a certain date or the contract terms change (think: “use it or lose it”).
Right of first refusal. While it’s not often thought of as a time variable, this kind of stipulation can force a discussion that’s time-bound. For instance, in an office lease, one party may have 30 days to match an offer to take on additional square footage in a building where they currently occupy space, or else it will be released to a new tenant.
Retroactive. Being able to take the terms of a deal and apply them to past behavior might be used to create greater flexibility on other issues. For instance, including past volume in future volume discounts.
One-time/recurring. One party might be more flexible if the consideration in question is done once. For instance, a one-time exception for a COVID-related inventory issue. Likewise, that party may become more flexible if it’s something that can be recurring.
Trial periods. Reducing risk through trial periods can sometimes create greater flexibility in other demands. Alternatively, forgoing trial periods may make a demand more acceptable.
And the list could go on and on, but daylight savings time extended my daylight by only an hour, so I’ll end it there and leave you with this final thought: How can changing time increase flexibility in your deal? By exploring that question, you’ll start to see all the time variables available to you. These can alter your leverage and potentially provide you with more flexibility in just about any deal.
We Can Help You Use Time to Improve Your Deal Outcomes.
Are you underutilizing time variables that could provide you with more leverage and increased flexibility in your negotiations? We can help! Drawing on 45 years of real-world negotiating experience, we’ll assist you with getting better deals, saving time, and creating value for all involved — not to mention preserving and even strengthening relationships. Let us partner you with one of our advisers, ensuring that you’ve got the broadest view of your deal.
About the author:
Sure, we could whip up a snappy bio about Brian’s experience as an entrepreneur, business owner, and Fortune 500 executive. While we’re at it, we could go on for an afternoon about his 20 years in marketing and advertising, developing brilliant consumer-engagement strategies for the likes of Google, Amazon, Samsung, Virgin Mobile, Microsoft, and Sony. But knowing Brian, he’d rather we not. Instead, he’d likely ask us to focus on something else — namely, other people ...