My customers take weeks to pay. How do I cover the gap?
Ways to close the gap between paying your costs and getting paid, from changing payment terms to borrowing against your invoices, cheapest first.
When customers pay 30, 60 or 90 days after you deliver, your costs come due long before the money arrives. The cheapest fixes change the timing: ask for deposits or payment up front, or ask your own suppliers for longer terms (trade credit). If a supplier offers a discount for paying early, compare it with the cost of borrowing: the IRS treats a cash discount as reducing what you paid for the goods.
When timing is not enough, you can turn unpaid invoices into cash. Factoring sells them to a provider at a discount. Asset-based lending borrows against them instead: banks commonly lend 70% to 85% of eligible receivables, according to the Office of the Comptroller of the Currency, with regular reporting and audits.
12 routes to look at, cheapest first
Compare the first 4 side by side- L0
Free or nearly free
Little or no cash cost, though most take time and admin. Some bring money in, and a few have small fees.- Own cash and no-cost
Customer prepayments, deposits and pre-orders
Ask customers to pay some or all of the price before you deliver. The cash comes in before your costs go out, so you need to borrow less, but until you deliver you owe customers the goods or their money back.
Days - Own cash and no-cost
Late fees and Prompt Payment Act interest
Getting paid what you are owed, sooner: interest that federal agencies must add when they pay you late, and late fees you write into your contracts with private customers. It costs nothing to claim, but it only works if your paperwork and terms are in order.
DaysNot a raise - Own cash and no-cost
Supplier trade credit
Your suppliers let you pay for goods or services some time after you receive them, often 30 or 60 days later. Usually free if you pay on time, but giving up an early-payment discount can make it expensive.
Weeks - Supplier and buyer-led finance
Federal contract financing
Payments a federal agency makes to its contractor before delivery, as costs are incurred or milestones are met, plus the right to assign contract payments to a bank as security. No separate charge, but it has to be in the contract, and it is meant to show up in a lower price.
Weeks
- Own cash and no-cost
- L1
Very cheap or subsidised
Borrowing on better terms than the market, usually because a public body, community lender or large buyer is involved. - L2
Mainstream secured debt
Standard borrowing from banks, credit unions and mainstream lenders, often secured on assets or backed by a personal guarantee.- Bank and mainstream debt
Business credit cards
Revolving credit for everyday business costs, up to a limit. Free if you clear the balance each month, but expensive if you carry it, and most consumer credit card protections do not apply.
DaysPersonal guarantee likely - Bank and mainstream debt
Business line of credit
A credit limit from a bank, credit union or online lender that you can draw on, repay and draw again, for short-term costs such as inventory, payroll and seasonal gaps.
WeeksPersonal guarantee likely
- Bank and mainstream debt
- L3
Specialist secured debt
Borrowing secured on specific assets such as invoices or inventory, with more fees and conditions than mainstream debt.- Asset-based and specialist lending
Accounts receivable financing
A loan or line of credit secured on your unpaid invoices. The invoices stay yours, you usually keep collecting from your customers, and how much you can borrow rises and falls with what they owe you.
Weeks - Asset-based and specialist lending
Asset-based lending
A revolving credit line secured on your receivables and inventory, where how much you can borrow moves with the value of those assets. Flexible for growing or seasonal businesses, but closely monitored and usually dearer than ordinary bank lending.
Weeks - Asset-based and specialist lending
Invoice factoring
A finance company (a factor) buys your unpaid invoices to other businesses at a discount, pays you for them before your customers do, and collects the money from your customers.
Days - Asset-based and specialist lending
Purchase order and contract financing
Money to fill a specific order or contract you have won but cannot afford to carry out, repaid when your customer pays. The SBA backs one version through banks; specialist finance companies offer others on their own terms.
WeeksUp to $5mPersonal guarantee likely - Asset-based and specialist lending
Spot factoring (single invoices)
Selling one unpaid invoice, or a few, to a factor for cash now, without signing up to sell it all your invoices. Useful for an occasional large invoice, but each deal is priced on its own.
Days
- Asset-based and specialist lending
Worth knowing
- Chase overdue invoices promptly and put clear payment terms, including any late fees, in your contracts.
- Before you sign a factoring or receivables agreement, find out the total cost over a year, any minimum fees, and how to end it.
Sources
- 12 CFR 1002.104 (Regulation B): trade credit defined · checked October 17, 2026
- IRS Publication 334: Tax Guide for Small Business (cash discounts) · checked October 17, 2026
- OCC: Comptroller's Handbook, Asset-Based Lending (version 1.1, January 27, 2017) · checked October 17, 2026
Facts about each route are sourced on its own page.