Quick answer
Ask when your account is clean and your volumes are growing, not when you're behind. Bring your payment record and forecast orders, then ask for one or two specific things: longer terms, end-of-month terms, a higher credit limit, staged deliveries or a discount for paying early. Before you sign a new credit application, read the guarantee, security and price-variation clauses carefully, because those matter as much as the number of days.
Key points
- The best time to negotiate is straight after a run of on-time payments, not when you're asking for leniency
- 30 days end of month gives you noticeably more average credit than 30 days from invoice
- Supplier credit applications often include a director's personal guarantee and a PPSR security interest
- Since November 2023, unfair terms in standard-form small business contracts can attract penalties
- An early payment discount is only worth taking if paying early doesn't push you into costlier borrowing elsewhere
Most owners spend a lot of energy trying to get their own customers to pay faster and very little on the other side of the ledger. Yet your suppliers are, in effect, one of your biggest lenders. Every day of credit they give you is a day of working capital you don’t have to borrow from anyone else, and it usually comes with no application fee and no interest.
Negotiating those terms isn’t about squeezing a supplier or paying late. It’s about agreeing, in writing and in advance, a rhythm that fits how cash actually moves through your business. Here’s how to approach it, what to ask for, and which clauses in a supplier’s paperwork deserve a second read.
What is supplier credit actually worth to you?
Put a dollar figure on it before you start. If you buy $60k a month from a supplier on 14-day terms, you’re carrying roughly two weeks of purchases, about $28k, on their money at any one time. Move to 30 days and that figure roughly doubles. The extra $30k or so is cash that stays in your account permanently, as long as your purchasing stays steady.
That’s why a small change in terms can matter more than a small change in price. A 2 per cent price cut on $60k a month saves about $14k a year. Extending terms by a fortnight frees up a similar sum in cash flow straight away, and you keep it as long as the arrangement lasts. Both are worth having. The point is to know which one you need more before you sit down.
Our working capital guide explains how supplier days fit alongside stock and debtor days in the overall picture.
When is the right time to ask?
Timing is most of the battle. You negotiate from strength when:
- Your account has been paid on time for six months or more. Suppliers’ credit teams look at history first.
- Your volumes are rising. A supplier who expects you to buy more next year has a reason to keep you happy.
- It’s annual review time. Many suppliers revisit pricing and terms at a set point in the year. Ask a month beforehand.
- You’ve had an offer from a competitor. You don’t need to threaten to leave, but a real alternative changes the conversation.
- You’re consolidating. Moving more of your spend to fewer suppliers gives each one a bigger reason to deal.
The worst time to ask is when you’re already behind. A request for longer terms from an account that’s 20 days overdue reads as a request for forgiveness. If that’s where you are, deal with the arrears first, or read our page on what to do when a supplier is demanding payment now.
What can you ask for besides more days?
Payment days are the obvious lever, but often not the only one a supplier can give. Pick one or two from this list rather than all of them.
| Ask | Why it helps | What it costs the supplier |
|---|---|---|
| Longer terms (e.g. 14 to 30 days) | More cash stays in your account | Their own working capital |
| End-of-month terms | Simplifies your payment run and adds average days | Similar to longer terms, easier to grant |
| Higher credit limit | Lets you buy for a big job without paying down first | Credit risk on a larger balance |
| Staged or split deliveries | You pay for stock closer to when you use it | Logistics effort |
| Consignment or sale-or-return stock | You pay only when it sells | They carry the stock risk |
| Price held for 6 or 12 months | Lets you quote your own customers with confidence | Exposure to their own cost rises |
| Early payment discount | Saves money when you have spare cash | A small margin |
| Seasonal terms | Longer terms in your quiet months, shorter in busy ones | Timing of their cash flow |
Seasonal terms are under-used. If your sales drop every winter or every January, a supplier may agree to extended terms for orders placed in the lead-up, in exchange for a commitment on volume. Our guide on funding seasonal swings covers this in more depth.
Why “30 days EOM” is better than “30 days”
These look similar on paper but aren’t. “30 days” usually means 30 days from the invoice date. “30 days EOM” (end of month) means 30 days after the end of the month the invoice is dated in.
Here’s the difference across a month of buying:
| Invoice date | Due on “30 days” | Due on “30 days EOM” | Days of credit (EOM) |
|---|---|---|---|
| 1 March | 31 March | 30 April | 60 |
| 15 March | 14 April | 30 April | 46 |
| 31 March | 30 April | 30 April | 30 |
On end-of-month terms, purchases spread evenly across the month get around 45 days of credit on average, against a flat 30. It also means one payment run a month instead of a trickle of due dates. If a supplier won’t extend the number of days, asking to switch to EOM terms is often an easier yes.
Read the credit application before you sign
When you open or renew a trade account, the supplier’s credit application is a legal contract, and it often matters more than the terms on the front page. Three types of clause are worth reading closely.
Personal guarantees. Many applications for companies include a guarantee from each director, making them personally responsible for what the company owes. You can ask for the guarantee to be capped at a dollar amount, limited to this account only, or released after a year of good payment. Our personal guarantee entry explains what you’re agreeing to.
Security over goods and other assets. Suppliers commonly include a retention of title clause, meaning they own the goods until they’re paid, and register that interest on the PPSR. That’s reasonable for the goods they supply. Look out for wording that extends the security to “all present and after-acquired property”, which can cover far more than their stock and may complicate a future loan application. Our guide to retention of title for suppliers explains how these registrations work.
Variation and termination rights. Check whether the supplier can change prices or terms by notice alone, cancel your credit without reason, or charge fees that aren’t spelt out.
Since 9 November 2023, the unfair contract terms rules apply with real teeth. ASIC confirmed that from that date unfair terms in standard-form small business contracts can attract penalties, and the protection now covers businesses with fewer than 100 employees or turnover under $10 million. If a standard-form credit application lets the supplier change the deal one-sidedly while binding you tightly, that’s worth raising. Business.gov.au’s page on laws affecting contracts is a good plain-English starting point.
Thinking about how terms like these interact with a loan you might need next year? Tell us what you’re planning and we’ll look at your options together.
How to run the conversation
Treat it like a short business meeting, not a favour.
- Prepare one page. Your last twelve months of purchases with this supplier, your payment record, and what you expect to order next year.
- Say exactly what you want. “We’d like to move from 14 days to 30 days EOM” beats “Is there any flexibility on terms?”
- Explain the reason. Growing volumes, longer customer terms on a new contract, or a seasonal pattern. A reason helps the credit manager approve it internally.
- Offer something back. A volume commitment, consolidating more of your spend with them, or paying by direct debit on the due date so they never chase.
- Get it in writing. Ask for an updated credit agreement or a confirming email from someone with authority.
- Then keep your side. Pay on the new due date every time. That record is your leverage next year.
A worked example: the bakery and two suppliers
This is an invented example. A Ballarat bakery with two shops buys about $35k a month of flour, butter and other ingredients from one wholesaler on 14-day terms, and about $8k a month of packaging from another on 7 days. The bakery has paid both on time for two years. It’s about to win a café supply contract that will lift ingredient orders by a third, but the cafés pay on 30 days.
The ingredient wholesaler. The owner books a meeting before the annual price review, brings a summary of two years of on-time payments and the new café contract, and asks for 30 days EOM terms. The wholesaler agrees to 30 days from invoice, plus a credit limit increase to cover the higher volumes. The bakery agrees to pay by direct debit on the due date. Moving from 14 to 30 days on around $46k a month frees roughly $24k of cash.
The packaging supplier. This supplier won’t move on days but offers a small discount for payment within 7 days, which the bakery was already doing. The owner also negotiates a fixed price for six months, which makes quoting the cafés easier.
The credit application. The wholesaler’s renewed application includes an unlimited director’s guarantee. The owner asks for it to be capped at the new credit limit and the supplier agrees.
The result: the café contract no longer needs a working capital loan to get started, and the bakery knows its ingredient costs for the first two quarters.
Mistakes that weaken your position
- Paying late and calling it “taking terms”. It erodes the trust you need for a genuine negotiation.
- Asking for everything at once. Two clear asks get approved; seven get referred upward and stall.
- Signing the renewal without reading it. New applications often carry new clauses.
- Taking the early payment discount with borrowed money. Check the dollar saving against what the borrowing costs you.
- Negotiating with the sales rep only. The credit manager usually decides terms. Ask the rep to bring them in.
When terms aren’t enough on their own
Sometimes a supplier can’t stretch, or a big order lands before your new terms kick in. A trade finance facility can pay overseas or local suppliers on your behalf and give you extra time to sell the goods, and our paying suppliers page compares the options side by side. Banks often offer trade facilities to established customers, and if your bank’s criteria fit, its offer is well worth considering. If it has said no, non-bank options exist.
Better terms, then a buffer behind them
Good supplier terms are one of the cheapest sources of working capital any business can get, and the negotiation above will pay for itself. Still, there are moments when a growing order book outruns even generous terms, and that’s the point at which a short conversation with us is worth having.
Our enquiry form is about sixty seconds of typing. Filling it in has no effect on your credit score, since no credit check is run when you simply enquire. We don’t circulate your details to a crowd of lenders, which means you won’t be fielding calls from businesses you’ve never heard of. A real member of our team reads your enquiry and rings you to discuss it. Please be precise about the amount, what it’s for and how your suppliers are paid, because clear details are what let us suggest the right fit on the first try.
Frequently asked questions
What are normal supplier payment terms in Australia?
There's no single standard. Business.gov.au gives 7, 14, 21 and 31 days as common examples of credit terms, and 30 days from invoice or 30 days end of month are both widely used in trade. Terms depend on the industry, your history with the supplier and how much you buy.
What does 30 days EOM mean?
It means payment is due 30 days after the end of the month in which the invoice was issued. A purchase on the 2nd of March is due at the end of April, while one on the 30th of March is due on the same day. On average that gives you more time than 30 days from the invoice date.
Do I have to sign a personal guarantee for trade credit?
Many supplier credit applications for companies include a guarantee from the directors, and some suppliers won't open an account without one. You can ask to limit the guarantee to a dollar cap, to remove it after a period of on-time payment, or to have it apply only to the company's account and not related entities.
Is asking for longer terms going to damage the relationship?
Not if you ask well. Suppliers deal with terms requests constantly. A request backed by a clean payment record, a growing order book and a clear reason reads as a business conversation. What damages relationships is quietly paying late and calling it negotiation.
Should I always take an early payment discount?
Only if you have spare cash or the discount saves more in dollars than it costs to borrow the money elsewhere. If paying early leaves you short and you have to draw on a credit line or delay another bill, the saving can disappear.