In B2B, “net 45” is just fine. But what it really means is that you are lending your customer money to run their business with your balance sheet.
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You pay salaries, vendors, equipment, taxes, and delivery today – while the invoice turns into cash weeks later. Profit looks great. The bank account looks crazy.
Here’s the easy test: Would you need more money to survive if you doubled sales next month? If so, your payment terms are your problem.
Three solutions that won’t sound threatening:
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- Start with money: 30-50% down or milestone payments.
- Bill on the milestone date, not “end of month when we remember.”
- Systematize collections: top 10 invoices, owner, next follow-up date.
And: Consider payment terms a price. Longer terms cost you money, so charge for it – or offer an early payment discount.
Most founders don’t have a “bad clients” problem. They have a “no process” problem.
Cash is oxygen. Revenue is a promise.