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Start by segmenting your suppliers¹

A successful payables strategy starts with knowing who you're negotiating with.

Suppliers don't all play the same role in your business. Start by grouping them into three categories and tailor payment strategies based on the role each supplier plays in your business. This helps you decide where and how to extend payment terms without putting operations at risk.

 

Negotiate longer terms with shared value²

Extending payment terms isn’t about asking for more time, it’s about presenting a strategy that works for both sides. Start with preparation, build trust through dialogue and offer value to reach outcomes that benefit you and your suppliers.

 

Build a structured payment policy

Once you've segmented your suppliers and started negotiating, the next step is to create a structured policy that ensures consistency across your accounts payable process. A clear tiered approach helps suppliers know what to expect and makes internal management easier.

 

Tiered Payment Terms

Apply different terms based on supplier category or spend level:

 

Roll out your payment policy in 4 weeks

Once your payment strategy is defined, it’s time to put it into action. This 4-week plan helps you implement changes methodically, so you can extend payment terms without disrupting operations or damaging supplier relationships.

 

Ongoing Management

To sustain and optimise for long-term success, work to maintain your strategy with regular reviews and feedback.

 

Use modern payment solutions

Digital payment tools can help you hold onto cash longer, without making suppliers wait. These solutions offer flexibility, improve efficiency and strengthen your working capital position while maintaining supplier satisfaction.

 

Work smarter with your suppliers

Extending payment terms isn’t just about improving cash flow — it’s about building trust and creating sustainable business practices. These best practices will help you manage payables while minimising compromising your relationships or risking supply continuity.

  • Communicate changes in advance
    Let suppliers know what to expect and when, so they can plan accordingly.

  • Explain the business rationale
    Be transparent about why extended terms are needed. Position it as a long-term partnership move.

  • Offer compensating benefits
    This could be larger orders, longer contracts or simplified admin processes.

  • Maintain payment reliability
    Once terms are agreed, stick to them. Reliability builds confidence. 
  • Imposing unilateral changes
    Never change terms without a discussion — it damages trust and may backfire.

  • Delaying payments without notice
    Even one late payment can undo hard-won goodwill.

  • Ignoring supplier concerns
    Suppliers are your partners. If they raise issues, address them quickly.

  • Sacrificing quality for terms
    Pushing too hard on terms can impact service or product quality in the long run.

 

¹ The invoicing practices and payment terms discussed are general recommendations. Businesses should ensure compliance with applicable commercial laws and tailor these practices to their contractual obligations.

² Businesses should ensure that supplier negotiations and contract changes comply with applicable commercial laws and privacy regulations. Legal advice may be required before accessing financial data or modifying agreements

³ Mention of financial tools and platforms is for informational purposes only and does not imply endorsement. Businesses should assess suitability and consult their financial institution or advisor before adoption