Nine in ten small suppliers accept bad payment terms to win work: a two-minute AI check before you sign

By Jason Sibley

A purchase order arrives and you're tempted to sign. Buried payment clauses decide when your money turns up. Read them first.

For your own customers, see customers paying slower: fix your terms before Christmas.

What the surveys say

These surveys asked different people different questions. Both commissioners sell invoice finance and have a commercial interest in cash flow problems; read the findings separately.

The “Created on Cash Flow” report, published on 13 October 2026, was covered by Retail Times and SME Today. Commissioned by eCapital UK, an asset-based lending funder (invoice finance), it surveyed 500 financial decision makers through Censuswide, at SMEs supplying goods and services to other businesses:

• 93% have accepted unfavourable payment terms to secure business; 35% do so often.
• 39% say restricted cash flow stopped them taking up growth opportunities in the last 12 months.
• 15% say severe cash flow pressure threatens survival.
• Among those under cash-flow pressure, 55% blame late customer payments.

The report arrived while the Commercial Payments Bill is progressing through Parliament. Ask your accountant or solicitor where things stand when a deal depends on it.

Bibby Financial Services, which describes itself as the UK's largest independent invoice financier, surveyed over 1,000 UK SME owners and decision makers for its SME Confidence Tracker. Its write-up says 60% report customers taking longer to pay than a year ago; 40% have been forced to shorten their own customer payment terms. The average owed in outstanding invoices is £72,000.

Derek Ryan, Bibby's CEO for North West Europe, said: “Even at 30 days, payment terms cause cashflow headaches for businesses that need to pay staff, suppliers, rent and rates.”

Where bad terms hide

Check these points. Acceptability depends on the wording and deal; these aren't legal conclusions.

• Days: longer than expected or quoted?
• Clock start: invoice date or invoice approval? Approval can sit in an inbox for weeks.
• Pay-when-paid: payment waits until their customer pays them.
• Set-off: they can deduct money they say you owe elsewhere.
• Invoice rules: a wrong purchase order number, contact or portal detail may mean the invoice counts as not received, restarting the clock.
• Retentions: part of your payment is held until later.
• Penalties: charges, such as for late delivery, deducted from payment.

If payment is late, see late payment rights you already have.

The two-minute AI check

This isn't legal or financial advice. AI can misread clauses. Show anything important to a solicitor or accountant.

Copy only the payment and invoicing clauses from the paperwork. Remove your customer's name, your own name and any prices or bank details, then paste beneath this prompt:

Act as a careful reader of the payment and invoicing clauses in a customer's purchase order, contract or supplier form. I run a small UK business and I am not a lawyer. Use British English and plain words.

I have pasted only the payment and invoicing clauses. Names have been removed. Using only this wording:

1. Say exactly when the payment clock starts (invoice date, invoice approval, delivery, or something else) and quote the words.
2. Say how many days I must wait from that point, and quote the words.
3. List conditions that could delay payment, including approval, invoice rules, purchase order numbers or waiting for their customer to pay.
4. List anything allowing deductions or amounts to be held back, including set-off, retentions, penalties or anything similar.
5. Suggest up to five plain questions to ask before signing.

Rules: Do not invent anything. For missing information, write “NOT STATED, owner to check”. Do not judge legality or fairness. This is a reading aid, not legal advice. Finish by reminding me to show anything important to a solicitor or accountant.

Clauses: [paste the payment and invoicing clauses here]

Check every quote against the original. Don't rely on paraphrases or invented quotes. Follow up every “NOT STATED”: another part of the contract might cover the gap, or it might remain unresolved.

What to do with the answer

You usually have four choices.

Ask one question back

Ask: “Does the 30 days run from the date on our invoice, or from the date you approve it?” One clear question can beat a long email.

Propose a change

Ask for the clock to start at invoice date or for fewer days. Clear invoice rules can help too. Some customers agree because nobody previously asked.

Price the wait

Put the wait into your weekly cashflow sheet. If you can't carry it, say so before delivery.

Walk away

Difficult terms can be a fair trade for a good customer. A contract with no clear payment end date may not be worth the turnover.

After invoicing, get paid without the awkward chase covers follow-up.

Before signing:

• [ ] I've copied only payment and invoicing clauses.
• [ ] I've removed customer names, my own name and any prices or bank details.
• [ ] I know when the clock starts and how many days follow.
• [ ] I've checked the AI's quotes against the original.
• [ ] I know who will check every “NOT STATED”.
• [ ] I've asked my question or proposed a change.
• [ ] I've calculated the wait's cost.
• [ ] A solicitor or accountant has seen anything significant.

One last thing

At My AI Apprentice we run AI sessions for small businesses, in plain English and with no jargon. If you'd like a hand reading the small print, get in touch. No pressure either way.