2 min read
Definition
Payment terms set how long a customer has to settle an invoice, such as "net 30". Longer terms delay cash coming in, widening the gap between paying suppliers and being paid — the gap working capital has to fund.
Why it matters
Generous payment terms strain cash flow and lengthen your debtor days. Tightening them, or using finance to bridge, protects affordability. See improving cash flow.
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