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Funny Money




Funny Money is ‘Money whose value has been artificially increased, or money that is not worth as much as it appears to be:  The banks have used funny money generated by creative accountancy to deal with vast amounts of public debt’ (Cambridge Dictionary)

In negotiation people use ‘funny money’ as a strategy to make money look insignificant. The aim is to put the other party under pressure and make them agree to a deal that is unfavourable to them.
This tactic is used especially when dealing with big numbers.
Let’s say two parties are negotiating over a $12.25 million contract. The buying party is asking for a 2.25% discount. They make it look like it is only a small ask, so not much to the overall price. What they don’t mention is the dollar amount for good reason. When the situation is already tense and the selling party is already under pressure to get the deal the selling party might agree to the deal without even having checked the actual number because it did not sound like much money.  
Three vital tips to not fall into the trap of the ‘funny money’:

1)     Never let the other party put you under pressure. Take your time. You can do that by taking a break; walk out of the room and review the information you have. Postpone the meeting to another day or get someone else to review the information for you and then make an informed decision. Once you have done that you will most likely counter with another offer.

2)     Don’t show your own pressures. Never let the other party know under what pressure you are. You might have internal deadlines you have to meet or there could be budget pressures to get to a deal.
You also have your own pressures; maybe you need to meet your KPI’s or you are working towards a promotion.

3)     Understand what pressures the other party is under. They are using a tactic that can potentially make you agree to something that you might later regret as you might have agreed to a deal that gave too much away.
Chances are that they are under similar pressures. Do they have a boss or a client who they are reporting to? Do they have budgetary constraints?
Call them out on it and ask why they are putting you under pressure as that means that they are under pressure too.
4)     Finally, be confident and own the conversation, don’t let them own the conversation.

#negotiationskills #octalonegotiation #negotiation #dealmaking #businessnegotiation


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