Negotiating supplier payment terms

Why supplier terms are cheap working capital

Trade credit from your suppliers is, in effect, an interest-free loan for as long as the terms run. Moving from paying on delivery to 30 days, or from 30 to 45, releases roughly one to one-and-a-half months of that supplier's spend straight back into your bank balance — and it stays released for as long as you keep trading. There's no facility fee and no interest.

The catch is that it has to be negotiated and honoured. Terms you take unilaterally by simply paying late damage your supplier, your reputation and eventually your supply. The goal here is agreed terms you can meet reliably.

Prepare before you ask

Walk into the conversation with the facts. Suppliers extend credit to businesses that look organised and dependable, not to whoever asks loudest.

• Know your numbers: your annual spend with this supplier, your payment history, and your current terms.
• Know your standing: a clean record of paying on time is your strongest card — lead with it.
• Pick the moment: at renewal, before a large order, or when you're consolidating spend with one supplier.
• Decide your ask and your fallback: e.g. ask for 45 days, accept 30 with a small early-settlement discount.
• Have something to offer: a larger order, a longer commitment, prompter paperwork, or a single point of contact.

What to ask for — the levers

Lever	What you ask	What it does
Longer terms	"Can we move to 45 days from invoice?"	Releases working capital
Early-settlement discount	"What discount for paying within 7 days?"	Cuts cost if you have cash spare
Volume rebate	"A rebate at £X annual spend?"	Lowers unit cost as you grow
Phased payment	"50% on order, 50% on delivery?"	Smooths large outlays
Credit limit rise	"Can we raise the account limit?"	Room to grow without prepaying

A script you can adapt

"We've valued working with you over the past [period] and we're planning to [grow the account / commit to a longer term]. We've always paid on time, and we'd like to move our terms to [45 days] to match how we manage cash across the business. In return we can [commit to X / consolidate our spend with you]. Does that work, or what would make it work for you?"

Notice the shape: open with the relationship and your track record, state the specific ask, offer something in return, and end with an open question that invites a counter rather than a flat yes/no. If the answer is no on terms, pivot to a settlement discount or a higher credit limit — you rarely walk away empty-handed.

Honour the terms — and bridge the rest

Whatever you agree, pay to it precisely. Reliability is what earns the next concession; a missed payment costs you every gain you've made and more. Set reminders on each due date and keep your incoming credit control as tight as your outgoing discipline — the two together are what fund growth.

If even well-negotiated terms can't close a genuine timing gap — say a big order ties up cash for 60 days before the customer pays — a short-term facility is the clean bridge. Credicorp Flex lets you draw to cover the supplier run and repay when the customer settles, with the lending to the company and no personal guarantee. Use the working-capital calculator to size it.