Are longer invoice payment terms from your customers depleting your working capital? Leverage eCapital’s Extended Payment Terms solutions to get paid faster.
Uncertain economic times are prompting large enterprises to extend payment terms with their suppliers. By prolonging invoice due dates, companies can maintain more cash on hand to navigate inflation and other economic challenges more securely. However, this creates a significant cash flow burden for suppliers.
If you’re a small to mid-sized supplier, waiting 90 to 120 days, or more, to receive invoice payments can cause severe cash flow shortages. In many cases, this can impact your ability to pay bills, restock inventory, pay staff or invest in growth opportunities. At worst, it could cripple your business.
To make matters worse, many small to mid-sized businesses lack the credit history and other financial requirements needed to secure traditional bank loans. With rising interest rates, you also may be unable to afford loans. Where does that leave your business when customers extend payment terms?
Recurring cash flow shortages due to extended payment terms can create several problems for businesses, particularly small and mid-sized ones. Addressing cash flow shortages can yield numerous benefits for businesses, including:
More working capital helps your business fulfill short-term financial needs, maintain strong supplier relationships, and replenish inventory promptly.
More financial flexibility enables swift adaptation to market changes, capturing new opportunities, and investing in innovation or expansion. These aspects contribute to long-term success, enhancing competitiveness and fostering sustainable growth.
Every organization has resources that can be leveraged to create working capital. Through our growing suite of financial products, we can provide the right solution to meet their capital needs head on.
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Enterprise businesses often employ extended payment terms as part of their financial strategy to optimize their cash flow and maintain more liquidity. This approach involves delaying payments to suppliers, typically ranging from 60 to 120 days or even longer, after receiving an invoice.
eCapital is an award-winning, industry-leader in the Extended Payment Terms solutions space. Here are a few reasons why businesses choose eCapital as their Extended Payment Terms partner:
Manage your money your way. With eCapital Connect, our proprietary account management software, you are in control of your finances at anytime, day or night.
Our rates are the most competitive in the industry. We know what it takes to maximize your working capital and will customize a solution to meet your needs.
We’re ready and able to provide the funding your business needs now and into the future. As your business grows, so does the invoice financing available to you.
We understand that working capital is critical to your business operations. We’re pros at onboarding new clients and our account management team is here for you every step of the way.
We believe in transparency in all we do. That means no surprises when it comes to our agreements.
Tap into our in-depth industry knowledge to better manage your business. Get smart, actionable advice and useful tips from our finance experts.
For over 25 years eCapital a freight factoring company has helped more than 30,000 businesses grow. We want to do the same for you. Take a look at the latest reviews from our customers on TrustPilot!
Accounts Receivable Financing, often known as factoring, is a type of financing where a business sells its accounts receivable (invoices) to a third party (a factor) at a discount. This provides the business with immediate cash flow instead of waiting for their customers to pay the invoices.
Extended payment terms can place a significant burden on suppliers, particularly smaller ones, by creating cash flow issues. Waiting for longer periods to receive payments can lead to cash shortages, making it harder to manage their own financial obligations. This is why some suppliers may look into financing options like factoring or supply chain finance to mitigate the impact of extended payment terms.
“Net terms” are often used in business-to-business transactions; they refer to the amount of time that a buyer has to pay an invoice in full to the seller. The time period is usually expressed in “net” followed by a number. For instance, “net 30” means that the buyer must pay the invoice in full within 30 days of the invoice date.
Here are common types of net terms:
Net 10: Payment is due 10 days from the invoice date.
Net 30: Payment is due 30 days from the invoice date.
Net 60: Payment is due 60 days from the invoice date.
Net 90: Payment is due 90 days from the invoice date.
Sometimes, sellers offer discounts for early payment, which is expressed in a format like “2/10 net 30”. In this case, the buyer would get a 2% discount if they pay within 10 days; otherwise, the full amount is due within 30 days.
Extended Payment Terms refer to the practice of lengthening the period of time a buyer has to pay for goods or services after purchase. Instead of requiring payment immediately or within a short period (such as 30 days, which is quite common), a seller might provide extended payment terms of 60, 90, or even 120 days.
This practice is often used as a financial strategy by businesses, particularly in uncertain economic times. By extending payment terms, companies can maintain more cash on hand, enhancing their financial flexibility and helping them navigate financial challenges more securely.
