Business Negotiation March 20, 2014

Changing the Time Shape

Change the Time Shape of Performance When and how a job gets done is subject to many variations.   It can be done all at once or over a period of time...

Change the Time Shape of Performance

When and how a job gets done is subject to many variations.  It can be done all at once or over a period of time.  It can be spread out in equal portions or bunched up early or late in the time schedule.  Every revision in the proposed performance plan has an effect on the risks and rewards for both parties.  The moment one party offers a different production plan or schedule, somebody in the other organization has something to gain or lose, so they listen. 

Many a deadlock has been broken merely by offering to change the time shape of performance.  To start sooner or later, or to do some things before others, can be of great value to one or the other party.  The potential for mutual gain or cost saving exists because there is always a better way to fit the buyer’s need to the seller’s capacity to produce. 

Change the Time Shape of Money

There is a song whose words go like this: “It ain’t what you do, it’s the way you do it.” When it comes to breaking an impasse a good approach is: “It ain’t what you pay, it’s the way you pay it.”

Probably the most common cause of deadlock is price.  A buyer is willing to pay $1,000, but the seller wants $1,200. One of the ways out of the dilemma is to change the time shape of money. 

Money may be paid in a variety of ways, or payments may be delayed.  One party may prefer a large advance and another none.  The payment period can be made long or short.  Monthly obligations may be designed to suit the parties’ changing needs.  Some prefer variable payments, others want fixed monthly payments.  In some cases people may not want payment to be made to them but sent instead to others for tax reasons.

The key point is that people have differing preferences for cash.  Even the wealthiest may find themselves short of working capital.  They may be desperate to get paid quickly in order to meet their own capital needs.  The negotiator who is wise enough to explore the time shape of money can make a better deal on the price itself. 
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