Terms are 30 days. The cash arrives on day 54.

The gap between agreed payment terms and actual receipts is usually blamed on customers. A surprising share of it is created before the invoice ever leaves the building.

By Steve 5 min read
Abstract bridge artwork for Terms are 30 days. The cash arrives on day 54.

A business with 30 day terms and a debtor book turning in 54 days has a 24 day problem. The instinctive reading is that customers are slow, that the sector has become worse about paying, that a firmer credit control policy is overdue. Sometimes that is right. More often, when the 24 days are broken into their parts, a meaningful share of them turn out to sit inside the business, before the customer has been asked for anything at all. This matters because the two halves of the gap have…

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