Extend Payment Contract For Free

Extending payment terms to 30 days, 45 days, 60 days or even 90 days improves your working capital. It's the equivalent of getting a bank loan or offering equity, but without the need to pay interest for this funding. And it makes sense when longer payment terms are standard for suppliers in that industry.

In short, extended payment terms are policies where one company allows its customer to pay their invoices over a longer-than-normal time period. Extended payment terms are usually 60, 90 or 120 days. EXAMPLE: A local candle company sells their candles at several stores that are a part of a large nationwide retailer.

How to Request a Payment Extension Contact your supplier and explain the situation. Request a payment extension in writing or by email. If you need further assistance, contact your bank or PayPal account company.

You can also try negotiating an extension with your supplier. Be sure to list the reasons why you need the extension and be clear about what you expect from them in return. If a payment extension is not possible or agreeable to both parties, then filing a dispute may be your best option.

It's proof that you're not just saying you're good at what you do but that big businesses believe it too. Extended payment terms also mean that because your customers have a better cash-flow, they have more available cash to invest in growing their business.

The main benefit of paying suppliers late is clear to see. By holding onto their cash for a little while longer, large companies can put it to use in other areas of the business as needed. They can stimulate growth and work on other projects, eventually paying the suppliers when these growth efforts yield fruit.

For the buyer, extended payment terms are a big positive, this means that they develop a healthy cash-flow as their financial outgoings are delayed while their usual incomings remain the same. But for their suppliers, this can cause a knock-on effect and stifle cash-flow.

The introduction of this third party adds flexibility to the relationship: Organizations can extend payment terms while at the same time reducing the amount of time it takes suppliers to get paid. Ultimately, this means more liquidity for both buyer and supplier, increasing efficiencies across the relationship.

What are extended payment terms? Extended payment terms are a strategy buyers use that leverages paying invoices over a longer-than-normal period, which can sometimes exceed 120 days or more. Buyers have deployed this tactic with success since the global financial crisis in the late 2000s.

Freeing up more of your working capital is a key benefit of extending your payment terms. But beyond that, extending your payment terms can force you to answer some key questions about your business. This is a natural result of freeing up more of your working capital.