Supplier Payment Terms: Negotiate More Cash
The Commercial Payments Bill standardizes payment periods to 60 days for private companies. This will squeeze your margins if you don't renegotiate. Founders should model their exposure and negotiate better terms to boost cash flow.
- The Commercial Payments Bill: 60-Day Payment Periods
- What This Means for a £200k-£2m Revenue Business
- Three Moves to Stay Ahead
- AskBiz: Surfaces Cash Flow Warnings
- Warning Signs to Watch
The Commercial Payments Bill: 60-Day Payment Periods#
The Commercial Payments Bill, as reported by Construction News, standardizes maximum payment periods to 60 days for private companies and 30 days for public bodies. This change will impact SMEs' cash flow, with an estimated £4,200/month in additional costs for some businesses. The Bill abolishes 'pay when/if paid' clauses, rationalizes the payment notice procedure, and mandates the sole use of the adjudication procedure in the Scheme for Construction Contracts.
What This Means for a £200k-£2m Revenue Business#
For a Leicester-based Shopify seller doing £40k/month, the new payment terms could mean an additional £1,200 in monthly costs. To mitigate this, founders should model their exposure relative to competitors and identify areas where their company is less exposed to negotiate better terms. According to Consultancy-me.com, understanding the magnitude of exposure and the extent to which competitors can mitigate it is crucial for competing on price and gaining market share.
Three Moves to Stay Ahead#
To stay ahead, founders should: (1) model their exposure relative to competitors and identify areas where their company is less exposed; (2) use negotiation training programs that provide immersive, pressure-rehearsal experiences, such as The Gap Partnership's Complete Skilled Negotiator; and (3) consider rethinking costs and taking advantage of the shift from globalization to regionalization to become a cost leader.
AskBiz: Surfaces Cash Flow Warnings#
AskBiz surfaces a cash flow warning: 11 days of runway left based on your Xero data. By connecting to Xero, founders can get instant data-backed answers to questions like 'What's my true landed cost per unit?' and 'Which product has the best margin after returns?' AskBiz's CFO Dashboard provides cash flow forecasting, margin analysis, and break-even tracking, enabling founders to make informed decisions about their business.
Warning Signs to Watch#
Founders should watch for warning signs such as decreased cash flow, increased supplier costs, and changes in payment terms. According to Business Insider, candidates should make detailed asks in a written follow-up and lay things out in writing to level the playing field. Founders should also track their exposure relative to competitors and identify areas where their company is less exposed.
Action Plan for This Week#
This week, founders should: (1) review their supplier contracts and negotiate better payment terms; (2) set up a cash flow forecasting system using AskBiz; and (3) track their exposure relative to competitors. By taking these actions, founders can boost their cash flow and stay ahead of the competition.
People also ask
How to negotiate better supplier payment terms
Model your exposure relative to competitors, identify areas where your company is less exposed, and negotiate better terms to boost cash flow.
What is the Commercial Payments Bill
The Commercial Payments Bill standardizes maximum payment periods to 60 days for private companies and 30 days for public bodies, abolishing 'pay when/if paid' clauses and rationalizing the payment notice procedure.
How does AskBiz help with supplier payment terms
AskBiz surfaces cash flow warnings and provides instant data-backed answers to questions about landed costs, margins, and break-even points, enabling founders to negotiate better supplier payment terms.
What is the impact of the Commercial Payments Bill on SMEs
The Commercial Payments Bill will squeeze SMEs' margins if they don't renegotiate supplier payment terms, with an estimated £4,200/month in additional costs for some businesses.
How to calculate true landed cost per unit
Founders can use AskBiz to connect to their Xero data and get instant data-backed answers to questions like 'What's my true landed cost per unit?'
Alice Watson is AskBiz's Head of Market Intelligence. She tracks regulatory shifts, pricing trends, and growth signals across global SME markets — and turns them into briefings founders can act on before their competitors notice.
Stop stockouts before they cost you customers
AskBiz predicts when you'll run out of stock, which suppliers are causing delays, and how much cash is tied up in slow-moving inventory.
Connects to Shopify, Xero, Amazon, QuickBooks, Stripe & more in minutes