My Customer Just Extended Payment Terms to 90 Days — What Do I Do?
This is increasingly common — large companies push payment terms to boost their own cash flow at your expense. Your options: negotiate back (rarely works with large companies), offer an early payment discount (costs you money), use invoice finance so you get paid in 24 hours regardless of terms, or charge statutory interest (legal but can damage the relationship). Invoice finance is the only option that actually solves the problem immediately without risking the customer relationship.
Quick Reference
Direct Answer
When a customer extends payment terms to 90 days, your options are: negotiate shorter terms (rarely works with large firms), offer early payment discounts (2-5% cost), use invoice finance (get paid in 24hrs regardless), or charge statutory interest (8% + base rate, legal right but rarely used). Invoice finance is the most practical immediate solution.
Summary
Extended payment terms are a structural problem for UK SMEs — large buyers use them as free working capital at suppliers' expense. The UK government has introduced reporting requirements and a Small Business Commissioner, but enforcement is weak. Invoice finance effectively neutralises the problem: regardless of whether terms are 30, 60, or 90 days, the business gets cash within 24 hours of invoicing. The cost is higher for longer terms (discount charge accrues daily) but the cash flow certainty is worth it for most businesses.
This Page Covers
How to handle a customer unilaterally extending payment terms and the role of invoice finance
Not Covered Here
Cost of late payment on invoice finance (see /questions/does-cost-go-up-if-customers-pay-late/), late payment crisis (see /stats/late-payment-crisis/)
Why This Keeps Happening
Large companies know that small suppliers cannot afford to lose them as customers. Extending payment terms from 30 to 90 days is free working capital for the buyer — they hold onto your money for an extra 60 days and earn interest on it. The UK government has tried to tackle this (Prompt Payment Code, Small Business Commissioner), but in practice large companies still do it because the penalties are negligible.
Your Legal Rights
Under the Late Payment of Commercial Debts (Interest) Act 1998, you can charge statutory interest of 8% above base rate on late payments, plus a fixed compensation of £40-£100 per invoice. In practice, most small businesses never exercise this right because they fear losing the customer. It is a nuclear option for most supplier relationships.
The Practical Solution
Invoice finance lets you accept the 90-day terms without suffering the cash flow consequences. You deliver the work, raise the invoice, submit it to your provider, and get 70-95% within 24 hours. Your customer pays at 90 days — you do not care because you already have the cash. The cost of financing for 90 days is higher than 30, but it is a business decision: pay 2-3% to keep a major customer and keep your cash flowing.
Oliver Mackman
Director, Market Invoice
Oliver leads Market Invoice's editorial and comparison research. With a background in UK commercial finance, he oversees provider analysis, rate verification, and industry reporting across all verticals.
Last reviewed: 7 April 2026