In partnership with
Long payment terms feel like a sales tool. In reality, they are a cash flow tax on your business. Do you factor in extending terms to your customers?
When you offer Net 45 or Net 60, you are financing your customers. That may grow revenue, but it often weakens cash. Many small businesses I chat with don’t realize this and think they “have” to go with the customer’s request to win the business….
What long terms really do
Push cash inflows out weeks or months
Increase receivables balances without improving liquidity
Force you to fund payroll, vendors, and taxes first
Potentially result in unknown bad debt scenarios
The silent cost
More working capital tied up in AR
Higher borrowing or credit line usage
Less flexibility to invest or hire
More stress around timing gaps
Why January is the time to review terms
New contracts and renewals often start now
Customers are resetting budgets and expectations
Small term changes compound all year long
Simple ways to tighten terms
Move from Net 60 to Net 30 where possible
Offer small discounts for early payment (if it makes sense)
Require partial upfront billing for large projects (especially risky customers)
Push ACH or card payments to speed collection…do not be a high percentage check collector for your business. ACH/Wire all day.
Revenue does not pay bills. Cash does. Payment terms decide when revenue becomes cash. January is about clarity and control. Your terms are one of the biggest levers you have.
If payment terms are stretching your cash, reply to this email, message me in the community, or email [email protected]. Small changes here make a big difference.
Sponsoring the Cash Flow Chronicles today is ATTIO!
Thank you for supporting our newsletter. Each time a reader engages with our sponsor’s ad, this directly supports CFC’s mission to be the TOP FINANCIAL newsletter Beehiiv has to offer.
Even if you do not buy a product, subscribe, etc. this greatly supports our mission. Take 5 seconds today and check them out!
Introducing the first AI-native CRM
Connect your email, and you’ll instantly get a CRM with enriched customer insights and a platform that grows with your business.
With AI at the core, Attio lets you:
Prospect and route leads with research agents
Get real-time insights during customer calls
Build powerful automations for your complex workflows
Join industry leaders like Granola, Taskrabbit, Flatfile and more.
Veteran business owner? Take command of your cash flow and tighten your financial systems. Join The Profit Platoon — a community built for Veterans.
