How to manage slow payment times from big businesses?
Small businesses can be severely affected when big businesses are slow to pay them. Recent government initiatives are putting them in the spotlight, as Australian businesses take an average 56.4 days to pay up, one of the worst among developed countries.
Invoice factoring could be a solution for you if clients are wanting longer payment terms. As a rule, I decline clients that want long payment terms. Even large clients are fine with 30 day invoices. But it really comes down to your undustry. As a rule, Unless the company is very large, I don't accept any payment terms longer than 14 days.
In the recent country that I worked, the pay up was about 3 months of the payment time. That was bad for the business, we didn't go bankrupt but we have to sell actives in order not to lose capitals and avoid getting bankrupt.
It can depend on the type of work and industry. Make sure you check their standard contracts and don't be afraid to ask for a change in the payment terms. The worst they can do is say no. What I find can usually happen is that you'll receive the details of a dedicated person who can help process your invoice quickly so it is in the accounting system and will be paid on the next cycle. It may not be perfect, but it's a manageable win!
