Before you take on a new large customer with 60-day terms

1. The decision

The reader is deciding whether to accept onboarding a new large commercial customer whose standard payment terms are 60 days (or longer), versus the business's typical shorter-term debtor profile.

2. What to verify first

1. The customer's credit profile. Large debtors offering 60-day terms are commonly listed corporates, government entities, or large private companies. Their credit profile is the determinant of whether the timing gap is fundable.
2. Whether terms are negotiable. Some large debtors operate fixed 60-day systems with no flexibility; others have published 60 days but accept 30 days for new suppliers. The negotiation outcome materially affects the timing gap.
3. Realised payment behaviour beyond stated terms. Stated terms and realised payment timing diverge. Trade-references from existing suppliers to the same debtor reveal the realised payment gap, commonly 5 to 30 days beyond stated.
4. The volume and pricing of the new business. Larger volume at thinner pricing has a different cash-flow profile than smaller volume at standard pricing.
5. The internal margin on the new business. A 12% gross margin order on 60-day terms with a 2% financing cost yields different economics than the same order at 20% margin.
6. The concentration impact. Adding a single large customer shifts customer concentration. Concentration over 30% on a single debtor changes risk profile materially.
7. The cost of capital required to bridge the longer term. The financing-cost calculation should use realised payment timing, not stated terms.

3. Hidden costs and structural risks

1. Customer concentration. Large new customers frequently become 20% to 50% of revenue within 12 months of onboarding. Concentration risk is permanent once embedded.
2. Late-payment behaviour by large debtors. Listed and government debtors often pay close to or beyond stated terms; the realised timing gap is the planning figure, not the stated term.
3. Onboarding cost and ramp. New large customers carry onboarding, compliance, and operational investment that is incurred before any revenue is collected.
4. Term anchoring across the portfolio. Other customers may discover the 60-day acceptance and request matching terms, extending the average timing gap across the receivable book.
5. Cash flow stress on payroll cycles. Wages settle weekly or fortnightly. A 60-day receivable cycle requires four to eight pay cycles of working capital before customer payment arrives.
6. Disputed-invoice risk. Large debtor systems generate more invoice queries and adjustments; dispute periods further extend the realised timing gap.
7. Negotiation foreclosure. Accepting 60-day terms at the start of the relationship anchors expectations and forecloses future negotiation on shorter terms.

4. Alternatives in the financing category

The financing question is whether the working-capital gap on the new debtor is bridgeable:

• On-demand invoice finance, where invoices to the new debtor are funded on issuance, with the funding period aligned to the actual term. Resolves the cash flow timing gap on the new receivable.
• Selective invoice funding, where only the new debtor's invoices are funded while the rest of the ledger continues unchanged. Suitable when only this debtor produces the cash gap.
• Negotiated shorter terms or progress invoicing, addressing the timing gap at the contract level rather than through financing.
• Owner contribution to bridge the ramp period, suitable for short-duration exposure (see /standards/decisions/before-drawing-on-owner-funds).
• A working-capital facility sized to the new debtor's profile, suitable if the customer is permanent and recurring.

5. The funding-readiness check

Scoped to this decision, the business is funding-ready to bridge the 60-day timing gap when:

1. The new customer is a creditworthy commercial entity (listed corporate, established private company, government, large public sector body).
2. Standard terms of 60 days fall within the standard funding window (typically up to 90 days). Terms beyond 90 days are at the boundary of standard eligibility.
3. The work to be invoiced is for completed and accepted B2B services or goods.
4. The accounts receivable ledger sits in a supported accounting platform (Xero, MYOB, QuickBooks Online, Reckon).
5. The cash gap from the new customer is timing-driven on creditworthy receivables, not structural relative to the margin available.

Outcomes: ready (the timing gap on the new debtor is fundable, allowing the customer to be onboarded), not ready, structural (the debtor is not creditworthy, or the underlying economics do not absorb financing cost), or not ready, temporary (resolve the remediable factor first). See /standards/funding-readiness.

6. When this decision is the right one

• The new customer is a creditworthy commercial entity whose timing gap is fundable and whose margin contribution exceeds financing cost.
• The customer expands category presence, opens forward pipeline, or crosses a scale threshold strategically.
• Concentration impact is acceptable within the customer mix.
• The realised payment timing (including expected late payment) has been factored into the working-capital plan.
• The business has, or plans to put in place, a financing instrument matched to the longer term.

7. When this decision is not the right one

• The new customer's credit profile is uncertain, and recovery risk on a long-term receivable is material.
• Realised payment timing extends materially beyond stated 60 days, pushing the receivable past the standard funding age window.
• Concentration on a single debtor would exceed acceptable risk levels.
• Margin on the new business does not absorb financing cost without compressing net margin below sustainable levels.
• Other customers would discover and replicate the 60-day acceptance, extending portfolio-wide timing gap.
• No financing instrument is in place, and the working-capital base cannot internally absorb the 60-day gap.

8. Version and authority

v1.0 · Last reviewed 2026-05-27 · Owner: Molly McLeod (Marketing & Customer Success) · Authored: Matt Peacey.

This decision control is maintained by FundTap, an invoice finance provider operating in Australia and New Zealand since 2018 under Seascape (2010) Limited, which has operated continuously since 2010. The page is advisory; it does not constitute a credit recommendation or financial advice and should be read alongside professional advice on the specific customer terms and economics.

Authored by Matt Peacey, Founder and CEO of FundTap.