What 60-day payment terms really cost a supplier, and how to price them
Published 2026-11-10 · Istrate Laurentiu, Negotra
When a buyer's procurement agent asks for 60 days instead of 30, it rarely looks like a price cut. It is one. The supplier finances the customer's stock for another month. This note shows the legal limits that apply in the EU and the UK, and a simple way to price longer terms before an AI buyer asks for them.
What the law allows
- EU. Directive 2011/7/EU on late payment says that between businesses the contractual payment period must not exceed 60 calendar days, unless otherwise expressly agreed and not grossly unfair to the creditor. Public authorities generally have 30 calendar days from receipt of the invoice.
- Interest. Under the same directive, statutory late-payment interest is the reference rate plus at least eight percentage points, and the creditor is entitled to a fixed sum of at least EUR 40 for recovery costs, payable without a reminder.
- UK. GOV.UK states that an agreed payment date must usually be within 60 days for business transactions (longer only if fair to both businesses); if no date is agreed, payment is late 30 days after the invoice or delivery. Statutory interest is 8% plus the Bank of England base rate, and fixed recovery costs are £40, £70 or £100 depending on the size of the debt.
These limits set the outer frame. Inside it, payment terms are a commercial variable the buyer's agent will negotiate like price.
How to price extra days
A simple rule: the cost of extra days ≈ invoice value × your annual cost of financing × extra days ÷ 365. With an illustrative financing cost of 8% a year, moving from 30 to 60 days costs about 0.66% of the invoice; to 90 days about 1.3%. On a product sold at a 20% gross margin, those 30 extra days take roughly one thirtieth of the margin. Use your own rate: overdraft, factoring fee or the return you would get on the cash.
| Terms | Extra days vs 30 | Cost at 8%/year |
|---|---|---|
| 30 days | 0 | 0% |
| 45 days | 15 | ≈ 0.33% |
| 60 days | 30 | ≈ 0.66% |
| 90 days | 60 | ≈ 1.32% |
What to write down before an agent negotiates
- Your standard terms and the price adjustment for each longer option (for example +0.7% for 60 days).
- The maximum terms you accept per customer group, and who may approve more.
- Whether you trade terms against price: a buyer who wants 60 days and a lower price is asking twice.
- Your late-payment position: statutory interest and recovery costs are a right, and saying so in your terms is part of the price.
In the Walmart pilot with Pactum's negotiation chatbot, longer payment terms were part of the agreements reached (see our note on that pilot). A buying agent will ask again at the next round, so the answer should come from a rule, not from memory.
Where Negotra fits
Negotra lets the supplier set the cost of longer payment terms as a rule. The agent adds it to the offer, checks every offer against the minimum margin and sends the deal to a person above the limits you set. In 110,000 simulated negotiations against procurement agents, including random payment terms and hostile buyer moves, it made 0 offers below the floor. These are simulation results on a demo catalogue, not customer results.