Long payment terms are normal. The gap they create doesn’t have to be.

For a business selling to larger organisations, extended payment terms are simply part of the deal. Sixty days is common. Ninety is not unusual. The work is done, the invoice is raised, and then the business waits.

What the wait actually costs

The obvious cost is the money itself: capital that is earned but not available. The less obvious costs accumulate around it. Suppliers are paid late or with early-settlement discounts foregone. Orders are declined because the cash to deliver them is tied up in the last ones. Owners spend their attention on cash forecasting rather than the business.

How businesses typically fund it

• Retained profit and personal capital, which works until growth outruns it.
• An overdraft, which is convenient but usually fixed in size and can be reviewed by the bank.
• Negotiating shorter terms, which depends entirely on the customer’s willingness.
• Invoice finance, which links the available funding to the ledger itself.

When invoice finance fits

Invoice finance tends to suit businesses that invoice other businesses for completed work or delivered goods, have a reasonable spread of customers, and expect the ledger to keep turning. It suits less well where sales are to consumers, where payment is conditional on future performance, or where the requirement is a one-off rather than ongoing.

For the right business, the appeal is structural: the facility grows with the ledger rather than needing to be renegotiated every time the order book changes.

General information, not advice. Whether any facility is appropriate depends on the individual business and the terms offered by providers.