2 min read
Definition
Payment terms state when and how an invoice must be paid — commonly net 30 (30 days from invoice), plus any early-settlement discount or late-payment interest clause.
In plain terms
Long terms win business but drain cash; short terms protect cash but can cost you the sale. The right answer depends on how much working capital you can afford to lend your customers for free.
Why it matters for your company
Halving standard terms from net 60 to net 30 can permanently free a large slice of working capital. If a big customer demands long terms, price the cost of that credit in — or fund it with invoice discounting. Statutory late-payment interest is calculable in the late payment interest calculator.
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Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.