Your suppliers are making money from you. Your customers are saving money from you. And you’re stuck in the middle, squeezed on both sides.

This is the fundamental tension of business: you need to pay suppliers (or they stop supplying), but you need to preserve cash (or you stop operating). Most business owners resolve this tension poorly; they either damage supplier relationships through late payments or they damage their own cash flow by paying too early.

The businesses that thrive solve this differently. They understand that vendor payment strategy isn’t about being nice or tough. It’s about alignment: structuring payment terms so that you pay when you have cash, suppliers are paid fairly and on time, and relationships strengthen rather than fracture.

When you start a business, you likely accept whatever payment terms suppliers offer. Most Nigerian suppliers offer Net-30 or Net-60: you get goods today, you pay in 30–60 days.

This sounds reasonable until you run the math.

You buy ₦1 million in inventory on Net-60 terms (payment due in 60 days). You sell that inventory over 45 days for ₦1.4 million. Profit is ₦400,000. But here’s the problem: you’ve sold all the goods (and generated all the profit) before you have to pay for them. That’s excellent cash flow, your supplier is essentially financing your growth.

But then your customer demands Net-30 terms. Now you sell goods to them today, and they pay you in 30 days. So the timeline becomes:

Day 0: You buy inventory for ₦1 million (not due until Day 60)

Days 1–45: You sell the inventory for ₦1.4 million

Day 30: Customers start paying you (but due to slow payment culture, many don’t)

Day 60: You have to pay your supplier

Day 75–90: You actually receive payment from customers

Now you have a 15–30 day gap where you’ve paid your supplier but haven’t received payment from your customers. If you don’t have cash reserves, you’re broke for two weeks every month.

Most businesses don’t think through this dynamic. They just accept standard terms and then wonder why they’re cash-constrained despite being profitable.

Most business owners never negotiate payment terms. They treat the terms their suppliers offer as fixed facts, like they treat taxes or rent.

This is a massive missed opportunity.

Supplier payment terms are negotiable. They’re not carved in stone. They’re tools that suppliers use to manage their own cash flow, and smart business owners negotiate them just like they negotiate prices.

A Kano-based furniture maker realized this when his supplier offered Net-30 terms. Instead of accepting it, he asked:

“What discount would you give for Net-7?” The supplier offered 2%.

“What’s my rate for Net-60?” The supplier offered Net-60 at standard prices.

Now he had options. On high-volume purchases where he had customers paying him quickly, he chose Net-7 and paid 2% less. On slower-moving items where cash flow was tight, he chose Net-60 and paid standard price. By negotiating terms instead of accepting them, he created flexibility.

Most suppliers are willing to negotiate because payment terms affect their cash flow. A supplier who gets paid in 7 days (even at 2% discount) might actually prefer that to getting paid in 30 days at full price, because the faster cash helps them buy more inventory or pay their own suppliers.

Professional businesses structure their relationships using a payment term ladder:

Tier 1: Suppliers you depend on (70% of purchases) Work to negotiate Net-30 or Net-45. These are critical suppliers. You need stability. Payment should be reliable and on-time. In exchange, they should be your preferred vendor and you should move volume through them.

Tier 2: Important but not critical suppliers (20% of purchases) Negotiate Net-15 or Net-30. These are backup suppliers or specialty suppliers. They’re valuable but replaceable. Your relationship should be solid but not require maximum credit extension.

Tier 3: Small volume or one-off suppliers (10% of purchases) Pay Cash on Delivery (COD). These are suppliers you use occasionally or are testing. There’s no reason to extend credit on small orders. Many actually prefer COD because it reduces their administrative burden.

This tiered approach does two things: it reserves your credit capacity (your ability to borrow from suppliers through payment terms) for suppliers that matter most, and it ensures you’re not overextended on small-volume relationships that don’t justify the cash flow burden.

Some of the best vendor payment strategies involve incentives, not just terms.

A Port Harcourt-based retailer negotiated a deal with her main supplier:

Pay within 7 days: 3% discount

Pay within 15 days: 1% discount

Pay within 30 days: standard price

Pay after 30 days: standard price (but relationship deteriorates)

This structure is brilliant because it aligns incentives. The retailer gets a discount if she has cash and can pay early. The supplier gets paid faster. Both benefit.

Now the retailer didn’t always pay within 7 days. But when she had good cash flow, she did, because the 3% discount added up. Over a year of ₦10 million in purchases, the 3% savings was ₦300,000 — real money.

The key insight: most suppliers assume their buyers will pay as slowly as possible. If you signal that you’re willing to pay faster for a discount, they’re often excited to work with you. You become the “reliable, fast-paying customer” instead of the “customer we have to chase.”

One of the biggest changes in Nigerian business over the past two years is the rise of digital payment platforms. This matters for vendor negotiations because it affects how expensive it is to pay.

A Lagos fashion retailer used to spend ₦500+ per transfer: fees, SMS charges, cash withdrawal charges. These added up. So she negotiated with suppliers: “I’ll pay you via bank transfer, but you give me 2% discount to offset the transfer fee.” Suppliers agreed because immediate digital payment was less of a risk than cash-based payment.

Now she’s using Lenco. The transfer costs are near-zero. She could reduce discounts. But instead, she uses those discounts as leverage to maintain faster payment cycles. Her suppliers get paid within 7–10 days consistently, which strengthens the relationship.

Digital payment platforms make it cheaper for you to pay, which gives you negotiating power you didn’t have before.

Sometimes, despite good planning, cash runs short. A major customer delays payment. An unexpected expense hits. A seasonal downturn arrives earlier than expected.

When this happens, the quality of your vendor relationships determines whether you survive with dignity or descend into chaos.

A Benin-based electronics retailer faced this when a shipment of goods was delayed due to a customs issue. He had to pay his supplier on Day 30 as agreed, but the goods wouldn’t arrive until Day 45. He didn’t have cash to pay without goods to sell.

Instead of disappearing or making excuses, he called his supplier immediately and said:

“I have a supply delay. I can’t take the 30-day terms as agreed. Can we delay payment to Day 45 when goods arrive, and I’ll pay interest on the delay?”

The supplier agreed to a 30-day extension at 1% interest (the cost of short-term financing). The retailer paid on Day 45 with goods in hand, the supplier got paid with interest, and the relationship strengthened because the retailer handled the problem professionally.

This happens because he’d built a relationship of reliability over time. When he needed flexibility, he had credit in the relationship bank to draw on.

Vendor payment strategy isn’t just about cash flow. It’s also about protection.

Smart businesses structure payment terms so they’re protected if something goes wrong:

Staggered payment: Instead of paying ₦5 million on delivery, pay ₦2.5 million on delivery and ₦2.5 million after 7 days of successful operation. If the goods are defective, you can withhold the second payment.

Quality holdback: Pay 90% on delivery, 10% after 30 days of quality verification. This gives you time to ensure the goods are defect-free before fully paying.

Inspection period: Pay full amount on delivery, but with right of return within 14 days. If goods don’t meet specs, you return them and get a refund.

These terms aren’t hostile. Professional suppliers understand that quality assurance is part of doing business. They’re often willing to agree because they want to deliver quality goods anyway.

Many Nigerian businesses work with too many suppliers. You buy from Supplier A today, Supplier B next week, Supplier C next month. This creates chaos: multiple payment dates, inconsistent quality, and no leverage.

Smart businesses consolidate. They work with 3–4 core suppliers instead of 12. Why?

Volume leverage: When you spend ₦10 million a month with one supplier instead of ₦2 million scattered among five, you have negotiating power.

Relationship strength: You’re predictable. The supplier knows you, invests in serving you, and prioritizes your orders.

Cash flow optimization: Four payment dates are easier to manage than twelve. You can align payment dates with your own cash flow cycles.

Quality consistency: Fewer suppliers means you know what to expect. Quality is more consistent.

A successful fashion retailer moved from 8 fabric suppliers to 3. Her payment terms actually improved because each supplier knew they were getting more volume. Her cash flow simplified because she had fewer payment dates. Her quality improved because suppliers were more invested in serving her.

Review your top 10 suppliers. What are your current payment terms with each? Can any be negotiated? Are you paying too early (like paying upfront when Net-30 is standard)? Are you paying too late (creating relationship strain)?

Start with your most important suppliers. Have a conversation: “Our relationship is valuable to both of us. Can we discuss payment terms that work for both?” Most suppliers appreciate being asked directly.

Never accept the first terms offered. Always ask about alternatives. “What if I paid within 7 days? What about Net-45?” Most suppliers have flexibility.

Consider whether immediate payment is necessary. If your cash position allows Net-7 or Net-15, negotiate for it. You preserve cash, and suppliers are still paid promptly.

The businesses that manage vendor relationships well are never the ones that complain about suppliers. They’re the ones that structure relationships so both sides win. That takes thought and negotiation. But it’s worth it.