The terms say 30 days. The money arrives on day 54.

The gap between the payment terms you agreed and the cash you actually collect is rarely a customer behaviour problem, and rarely fixed by shortening terms.

By Steve 5 min read
Abstract bridge artwork for The terms say 30 days. The money arrives on day 54.

A business with £6m of revenue and 30-day terms that collects in 54 days is carrying roughly four extra weeks of sales in its debtor book: around £400,000 of cash sitting in other people’s bank accounts. The instinctive response is to tighten terms, add interest clauses, or lean harder on the ledger. The instinctive response usually fails, because the 24-day gap is almost never made of 24 days of customers deciding not to pay. It is made of a sequence of small, uncontested delays, most of which happen inside your…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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