Payment Terms

A question about : Payment Terms

Hi, not sure if i am posting this in the right place... but here goes!

We have a small agricultural contracting business and we have always stated that payment terms are 28 days after date of invoice. We are struggling with cash flow at the moment and was thinking about changing our payment terms to 14 days.
Can i change the payment terms on our invoices to 14 days without any reason (such as customer not paying on time)?

Thank you in advance.

Best answers:

• Its more suited to the Small Biz section, could ask 1 of the board guides to move it.
• Thank you - not sure how to get one of the board guides to move it though
• If you have any credit account holders do bear in mind they may refuse new terms and also if you deal with large companies then payments are made usually end of month other than that all will be well.
• You can offer whatever terms you like, and there's nothing wrong with asking for cash up front. The client may agree or bargain with you or go somewhere else, but that's business. Make sure what you offer is worth paying quickly for!
  to consider is to offer a 5% (say) discount for upfront payment. You lose a few quid on the job but your cashflow blossoms and you avoid non or late payers and bank and overdraft fees. You could even rise account prices by 5%, so your discount doesn't cost you anything! Or add an extra service for upfront payment instead of a discount. Just a reason to keep the cash flow in your favour!
• Just to clarify, you can agree upon any terms you want before the agreement is entered into.
  But you cannot change the terms of the contract half way though.
  So if you supply widgets or some service to farmers, you can agree on 14 day payment terms before an order is placed, or advise you want to change the previously agreed terms and allow the farmer to decide whether he wants to place another order for whatever you supply.
  But you can't just change the terms after the contract has been entered into. e.g if he's placed an order on 28 days payment which you accepted, and then in the meantime placed another similar order which you accepted, only to then find he doesn't pay the first invoice on time, you cannot issue the second invoice with reduced payment timing terms as that was not the basis of the contract.
  You can have different payment terms for different customers ... if that is what you agree. We do that. Some customers like the competitive price we charge for prompt payment. Some customers (usually large companies) will not change their own lengthy payment procedures, even it it ends up costing them more in the long run.
  Obviously we keep a close eye on any credit we decide to extend, especially when they don't plan to pay us for 3 or even 6 months. But with some large, successful companies or goverment departments, we are confident we will get paid eventually ... and our bankers usually agree