The Contingent Purchase Order Reassures Buyer and Seller

Who has time to evaluate?

After a nominal evaluation, an EDA tool buyer may find that a product can help improve their design flow, but it is missing a critical feature. It is risky for the buyer to purchase “as is”.

The seller may want to develop the feature. It will take time, money, and resources. It is risky for the seller to invest in developing the feature without a buyer’s commitment.

One way to accelerate this sales cycle is to offer a Contingent Purchase Order.

The Contingent Purchase Order accelerates good outcomes for both sides

The Contingent Purchase Order is a good solution for buyer and seller. The buyer commits to purchase by issuing a Purchase Order with a specific delivery condition. The seller receives full payment on delivery of that condition. The Contingent Purchase Order lays out a clear set of objectives to be met focusing the buyer and seller on solutions and deliverables. It protects both parties.

The Contingent Purchase Order reaffirms the buyer’s commitment and budget to purchase the product. The seller can develop new features to satisfy the buyer with confidence that full payment will be received.

Writing a good Contingent Purchase Order is important

A Contingent Purchase Order is not a handshake agreement. It is an actual Purchase Order. Like any other order, it is a purchasing commitment stating product, price, payment terms, and delivery dates. It differs from a regular Purchase Order by including conditions to be met before full payment is made.

Contingencies must be clearly written to enable both sides to check-off completion without question. Anyone familiar with SMART goals can write a good set of contingencies for a Purchase Order. Each contingency must be specific, measurable, achievable, relevant, and time bound. A good refresher on writing SMART objectives can be found at The Professional Academy’s blog titled “What are SMART objectives and how do i apply them?” https://tinyurl.com/yxh9n9bc.

The Contingent Purchase Order breaks the stand-off

The seller commits to deliver a well-defined set of features and the buyer commits to make the full payment upon delivery, mitigating risks to both sides. This reduces buyer anxiety when purchasing the product. It also reduces the seller’s risk of dedicating the resources to deliver the missing feature.

The Contingent Purchase Order is an excellent way to reduce the risk to buyer and seller. It is a win-win for everyone.

Modesto (Mo) Casas guides Founders, Entrepreneurs, Executives, and Board Members around the world to optimize sales growth and performance in their organizations, leverage their strengths and avoid the hidden challenges that stand between great ideas and sustainable revenue.

Tags: global business, negotiation, sales, ways of doing business

Categories: business, growth

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