Question

How would I go buy negotiating the contract below. This was an email sent by the testing lab.

Email:

Our annual budget year runs July 1 – June 30, so we need to be paid in the same fiscal year that our work occurs, so any work conducted in May and June needs to be paid by June 30. We cannot honor the NET 45 term for our end-of-fiscal year work.

Answer 1

You have to negotiate and convince your service provider to agree for the Net 45 term.

You can write an email arguing and convincing the following points:

• We fully appreciate the point raised by you.
• We just want to bring your notice that accrual and cash flows are two different things. You can definitely accrue your earnings in the same fiscal year you complete the job in. Our NET 45 term, simply defers the payment by 45 days. So the actual cash flow will occur 45 days later, say in the next fiscal, but as per accounting norms you can definitely accrue the income in the same fiscal year.
• We therefore believe that your annual budget year running from July 1 to June 30, is not a hindrance in the NEt 45 term.
• We will be glad if you accept our term, so that we proceed ahead with rest of the activities.