How to negotiate better payment terms with your customers

Shortening the time your clients take to pay you is one of the most direct improvements to your working capital position — and it's negotiable more often than founders assume. Most clients pay in whatever cycle is convenient for them unless you ask for something different.

The time to negotiate payment terms is when you're winning the business, not after you've started delivering. Once a client is receiving your service and you're asking them to change from 45-day to 30-day terms, you're asking them to change an established process — much harder than establishing the right terms from the start.

For new clients: your standard terms should be your opening position. Net 30 is reasonable for most B2B services and products. If the client wants Net 45 or Net 60, ask what they're trading in exchange — can they give you a longer contract, a higher volume commitment, or a price adjustment that compensates for the extended terms?

For existing clients where you want to improve terms: frame it as a business review, not a demand. 'As part of reviewing our client terms, we'd like to move our agreements to 30-day standard payment terms. I wanted to discuss this with you before making the formal change.' Most clients who value the relationship and find it reasonable will agree.

Include consequences in the contract. Late payment interest (18% per annum is standard and legally enforceable) should be in your contract. Most clients will pay on time to avoid interest charges even if they don't take your reminders seriously.

Offer something for faster payment. A 1–2% discount for payment within 10 days is often cost-effective if your working capital cost is 15–20%. Many clients with good treasury management will take the discount and pay early — giving you the cash and saving them money.