A guide to setting payment terms and reviewing your pricing. Get paid on time, keep customers happy and protect your cash flow

Why payment terms matter

Late or long payment terms cause real trouble for small businesses. Research has shown that businesses are owed around £26 billion in late payments at any given time, on average £17,000 per business*. This can stop businesses from paying staff, buying stock, or investing in growth. It can even cause businesses to close. 14,000 UK businesses close each year because of late payments*. That’s why setting good payment terms really matters.

What are common payment terms?

You may see terms like ‘Net 30’ or ‘Net 60’. These mean your customer must pay in full within 30 or 60 days of the invoice date. A common choice is Net 30, but you can set terms based on who you’re working with.

How to choose smart terms

Know your customer type

• Large, creditworthy firms may expect Net 30 to Net 60 terms. Still, you can ask for faster payments.
• For smaller businesses or new customers you can start with shorter terms, like Net 15 or payment on receipt.

Offer early payment discounts

Giving a small discount for early payment can help you get paid faster. For example, ‘2/10 Net 30’ means the customer pays in full in 30 days but gets a 2% discount if they pay in 10 days.

Use discounts when cash flow matters most.

Balance risk and flexibility

Longer terms may help win big clients, but they delay your cash. Shorter terms help you stay safe but may put pressure on customers. Try meeting halfway. You could say Net 45, but ask for 50% up front.

How to negotiate terms

•Explain why terms matter to your business.

•Offer options, such as small discounts for early payment.

•Be clear but kind. Build trust as well as cash flow.

Link between payment terms and growth

Good payment terms can help your business grow. Research shows that small businesses with immediate payment terms saw faster sales growth compared to those with 90-day terms^. Clear, fair terms can help you plan ahead.

How to use terms effectively

• State terms clearly on your invoice.
• Include terms in your contract or agreement.
• Follow up early if payment is late or send a friendly reminder.
• Track Days Sales Outstanding (DSO). This shows how many days it takes to get paid. A lower DSO means better cash flow.

Smart payment terms can help your business stay strong and flexible. Use simple terms that suit each customer. Offer small discounts for early payment. Be clear on invoices. Track how well customers pay. This way, you keep cash flowing, build trust, and can grow with confidence.

Review your pricing

Reviewing your pricing regularly can help with cash flow, profitability and staying competitive in the market. You should plan to review every 6 or 12 months. And you should also take time to review if things change. For example, if your costs, demand or competitors change.

Analysing your costs and doing some market and competitor analysis should form part of your review. You should also review your pricing strategy to make sure it still works best for your business and the goals you have for it.

Enterprise Nation have a pricing guide with more information to help with your review.

More support

Take control of your payments and review your card service providers to make sure you’re getting the best fees, reliability and support. We’ve partnered with Worldpay, one of the biggest payment providers in the world. They offer strong security, fast payouts, and scalable solutions. They could reduce your costs, improve your customer experience, and help your business run more efficiently and competitively.

Explore Worldpay

For more support with cash flow and payments check out our articles on how to deal with late payments and cash flow forecasting.

For a more in depth understanding of cash flow management check out this online course on managing your cash flow efficiently.

* https://www.smallbusinesscommissioner.gov.uk/late-payments-research-2/

^ https://quickbooks.intuit.com/uk/blog/small-business-late-payments-report-2025/