A Manufacturing Services Agreement establishes how a manufacturer will produce goods on behalf of another party, often covering quality, delivery, and intellectual property. This playbook highlights negotiation tactics for pricing, warranty coverage, and supply chain continuity.
Why This Matters: Clear payment terms protect against cash flow disruptions and disputes over payment, minimizing financial and administrative risks.
Negotiation strategy
If you're the Company:
Ensure payment milestones are clearly defined and achievable. Confirm invoicing processes are detailed, including submission and approval timelines.
If you're the Contractor:
Negotiate for reasonable payment terms that align with your cash flow needs. Ensure late payment remedies are fair and enforceable.
Essential elements
1
Payment Schedule
Defines timing of payments.
2
Invoicing Procedures
Details invoice submission process.
3
Late Payment Remedies
Outlines penalties for late payments.
Action framework
ACCEPT
Propose edits if payment terms do not align with business objectives or cash flow needs.
EDIT
Reject if terms are overly burdensome or unenforceable.
ADD
Add if payment terms are missing or incomplete.
PRO TIP
Always ensure payment terms are consistent with internal financial policies and legal standards.
Example clauses
FAVORABLE
Preferred Payment Terms
"Payments shall be made in accordance with the following schedule: [insert schedule]. Invoices will be submitted [insert frequency], and payment is due within [insert number] days of receipt. Late payments will incur an interest charge of [insert rate] per month."
NEUTRAL
Standard Payment Terms
"Payments are due within 30 days of invoice receipt. No interest will be charged on late payments."
UNFAVORABLE
Unclear Payment Terms
"Payments shall be made as agreed. Late payments may incur penalties."
Fallbacks
International Transactions
If the contract involves international parties, include currency exchange provisions and international payment methods.
High-Risk Projects
For high-risk projects, ensure payment terms include upfront deposits and milestone-based payments to mitigate risk.
Long-Term Contracts
In long-term contracts, consider including periodic reviews of payment terms to adjust for inflation or changes in scope.
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WEEK 1
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WEEK 2
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WEEK 3
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Your team builds initial playbooks, reviews existing clause libraries, and trains the DocJuris agent to align with your internal standards and negotiation positions.
WEEK 4
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