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5 hacks to get paid quicker by your large customers

It's a huge day when you win your first big customer contract - and certainly one to celebrate! However, bigger organisations, come with bigger considerations that you need to be aware of.  You should be prepared for dealing with big departments, rather than your original contacts and being presented with a standard terms of business to sign - which is usually non-negotiable.

The news might also come that you won't get paid for 3 months or even longer if you have to do the work first. It's not uncommon for larger customers to insist on 60-120 day payment terms. Sometimes there's nothing you can do but accept the terms, however there are a few things you can do to soften the impact and here they are!

  1. Know what is reasonable. Always start by requesting 30 day (or maybe even 14 day) payment terms. Immediate payment is rarely feasible unless you accept credit card. Request amendments to any contract you are given, if the standard is something else. Expect that you might end up at 45-60 days as a compromise. Rarely accept payment terms more than 60 day.

  2. Recognise supplier credit terms are a procurement team KPI only. In most large businesses, there is no downside to your buyer in advocating internally for you to have preferential terms. Payment terms are not one of their KPIs.  Never believe the claim from procurement that all suppliers accept their standard payment terms and they are non-negotiable. If your buyer supports the claim that your the services are business critical or that they have received preferential pricing for quicker payment, you will get better terms. 

  3. Offer a prompt payment discount. A 3-5% discount might not sound much, but procurement's other main KPI is price, so its always worth making an offer. Although it might work out cheaper to factor the debt through a third party like Market Invoice. Some large business  issue early payment offers within their supplier portals too.

  4. Take advantage of the wording in contracts. Procurement teams generally just get involved in agreeing master service agreements (MSAs) and are less involved in the individual statements of work (SOWs) that sit under them. MSAs normally define how many days after the invoice date, invoices will be settled, but they rarely prescribe the billing milestones which define when invoices can be issued. Billing milestones are usually included in the SOW. Define payment dates (rather than invoice dates) in your SOW and then just issue invoices ahead of the payment milestone under the justification its when the money's due, not when you agreed to issue the invoice

  5. Watch out for the "End-of-month" (EOM) clause. This means invoices are paid X days from the end of the month of issue. So invoices issued on 1st or last day of a month, would still be paid on the same date, even if one invoice was sent 30 days earlier. Back-date invoices to the last day of the prior month to get around this.

So, that's just a few tips on how to make sure your voice is heard amongst the big boys and that everyone plays fair. 

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