payment-terms

---
name: payment-terms
description: Works out when cash actually reaches your bank, compares it with when each supplier takes theirs, prices any early settlement discount, and prepares a costed ask per supplier with the UK statutory late payment position stated correctly. Use before renewing supplier terms, before accepting a settlement discount, or when the bank balance dips mid-month while the business is busy.
---

# Get paid before you have to pay

You give it your last month of takings, your supplier invoices and whatever terms are written on them. You get back a table showing exactly where money leaves before it arrives, the real day count hiding behind every "30 days end of month", the true annual cost of any early settlement discount, and a one-page ask for each supplier you can read down the phone.

## What it does

1. **Write down when your money actually arrives, before you look at a single supplier contract.** Take the last full calendar month. For each way the business gets paid, record the gap in days between the sale and the cash landing in the bank: card takings (read the settlement date on your merchant statement, never the sale date), cash banked, delivery platform payouts, function deposits, and invoices to account customers. Write one line each: source, typical days to cash, roughly how much a month. Every term negotiated later is measured against these numbers and nothing else.

2. **Build the supplier table from documents and bank lines, with the written term and the enforced term side by side.** One row per supplier: name, monthly spend, the term printed on the invoice or order form, and the real gap between invoice date and the day the money left the account, taken from the last three payments to that supplier. Suppliers routinely print "payment on delivery" and collect by direct debit a fortnight later, or print 30 days and start chasing at 21. Where the two differ, keep both in the row and mark which one you will quote back at them.

3. **Turn every "end of month" term into two real dates and a day range.** "30 days end of month" is not 30 days. Work both ends: an invoice dated the 1st sits until the month closes before the 30 days start, so payment falls due around 59 days later, while an invoice dated the 29th falls due around 32 days later. Do this for every supplier row and for your own sales terms. The shorthand is also ambiguous between "30 days after month end" and "end of the month following", so send one line in writing asking which reading applies and put their answer in the row.

4. **Rank the gaps by pounds multiplied by days, and negotiate down that list.** For each row, subtract your cash-in days from the supplier's real payment days. A negative number means you are funding that supplier out of your overdraft or your own savings. Multiply the monthly spend by the size of the gap to get a pounds-days figure, sort highest first, and work the top three only. Chasing every supplier at once gets you nowhere with all of them.

5. **Price every early settlement discount as an annual interest rate before accepting or offering one.** Divide the discount by (100 minus the discount), then multiply by 365 divided by the number of days brought forward. A 2% discount for paying 20 days early is 2 divided by 98, which is 2.04% for 20 days, and there are 18.25 such stretches in a year, so it is worth about 37% a year. Take a discount only when that annual figure beats what the money costs you elsewhere, using your actual overdraft or card rate from your own bank statement. Offer one only when the annual figure is lower than what the early cash is genuinely worth to you.

6. **Settle the VAT wording on any discount before the terms are agreed, not afterwards.** HMRC's VAT guide (Notice 700), section 18.2, states: "If you offer a discount on condition that the customer pays within a specified time, then the tax value is based on the actual amount paid, but if you need to account for the VAT before you know whether the discount has been taken up, you must declare the VAT on the undiscounted price." The wording has to be on the original invoice, so it cannot be bolted on later. Write the intended invoice line into the document and flag it for the accountant to approve before the first discounted invoice goes out.

7. **Look up the other side's own published payment record before you make the call.** Large businesses must publish their payment performance twice a year, and GOV.UK's service lets you see "the average time it takes for a large business to pay its suppliers" and "the proportion of payments (for example, invoice payments) that it does not pay on time" at check-when-businesses-pay-invoices. A business only appears if it meets at least two of £54 million turnover, £27 million balance sheet total and 250 employees, so most local suppliers will not be listed and an empty search proves nothing. Where a figure exists, put it in the row and quote it back word for word.

8. **State the statutory late payment position with the correct reference date, then say what the contract gives away.** Where nothing else is agreed, GOV.UK sets payment terms of "within 30 days" for public authorities and "60 days for business transactions", and statutory interest runs at 8% over the Bank of England base rate. The rate is not today's rate: the Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002, article 4, fixes it at "8 per cent per annum over the official dealing rate in force on the 30th June (in respect of interest which starts to run between 1st July and 31st December) or the 31st December (in respect of interest which starts to run between 1st January and 30th June)". Bank Rate was 3.75% on both 31 December 2025 and 30 June 2026, so interest starting at any point in 2026 runs at 11.75%, which is 32p a day on £1,000, plus a fixed sum of £40 on debts up to £999.99, £70 from £1,000 to £9,999.99 and £100 at £10,000 or more. Record next to each contract whether it names its own interest rate, because GOV.UK is blunt that "You cannot claim statutory interest if there's a different rate of interest in a contract".

9. **Write the one-page ask for each of the top three, with something offered in return.** Each page carries five lines: the terms today, the terms you want with a date, what you give back, the fallback you will accept, and the point at which you stop buying from them. Pair the ask with something that costs them little and you nothing: one consolidated weekly invoice instead of daily ones, a single fixed delivery day, direct debit on a stated date each month, or a volume commitment you can actually meet. Never ask for longer terms and a lower price in the same sentence, because it lets them concede the cheap one and refuse the other. Put a review date in the diary 90 days out and re-run steps 1 and 2 then.

## Then it checks

1. Every supplier row shows both a written term and an observed term, with three dated payments behind the observed one, and no row reads "unknown" or "as agreed".
2. Every "end of month" or "EOM" term appears as two worked calendar dates and a day range, and the shorthand appears nowhere on its own.
3. Every discount named in the document carries its annual percentage, the arithmetic that produced it, and a plain yes or no against the owner's own borrowing rate taken from a bank statement.
4. The statutory interest figure names which reference date it used, 30 June or 31 December, states the Bank Rate on that date, and equals that rate plus 8.
5. Each fixed compensation amount matches its debt band: £40 up to £999.99, £70 from £1,000 to £9,999.99, £100 at £10,000 or more.
6. Each one-page ask names one thing given in return, one fallback, and the pounds-days gap from step 4 that it is meant to close.

Any check fails: name it, redo that step once. Failed twice: say what is wrong and stop.

## Rules
- Public information only.
- Never invent a fact, a number or a quote.
- Never state a statutory interest rate without naming the reference date it was taken from. A rate lifted from today's Bank Rate instead of the 30 June or 31 December figure produces a wrong demand, and a wrong figure hands the debtor a reason to dispute the whole claim, which leaves you worse off than sending no interest claim at all.
- Never record a supplier's terms from memory or from something said on the phone. Only a document or a bank line goes in the table. An ask built on a half-remembered term collapses the moment they produce the signed order form, and you lose the next three asks along with it.
- Never put a discount in front of the owner without its annual percentage beside it. A 2% discount reads as small and costs about 37% a year, so presenting the headline alone talks an owner into the most expensive borrowing in the business.
- This is a working document prepared for the owner's solicitor and accountant to check. Payment terms are contract terms, the interest position is a legal right that a contract clause can remove, and the VAT treatment of a discount is a tax matter. Nothing here is legal or tax advice and it must never be presented as such.

## Built from
- GOV.UK, "Late commercial payments: charging interest and debt recovery", https://www.gov.uk/late-commercial-payments-interest-debt-recovery, no publication date shown on the page, read 13 September 2026: the default 30-day public authority and 60-day business terms, the 8% over base rate rule, the £40, £70 and £100 fixed sums, and the warning that a contractual interest rate blocks the statutory claim.
- legislation.gov.uk, "The Late Payment of Commercial Debts (Rate of Interest) (No. 3) Order 2002", https://www.legislation.gov.uk/uksi/2002/1675/made, made 22 June 2002: article 4's rule that the base rate used is the one in force on the preceding 30 June or 31 December, not the rate on the day you write the letter.
- Bank of England, "Interest rates and Bank Rate", https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate, rate held at the 30 July 2026 decision, read 13 September 2026: Bank Rate of 3.75% and the next decision date of 17 September 2026, which is what makes the 2026 statutory rate 11.75%.
- GOV.UK, "Check when businesses pay invoices", https://www.gov.uk/check-when-businesses-pay-invoices, no publication date shown on the page, read 13 September 2026: what the public payment performance search returns and the £54 million, £27 million and 250 employee thresholds that decide who appears in it.
- HM Revenue and Customs, "VAT guide (VAT Notice 700)", https://www.gov.uk/guidance/vat-guide-notice-700, no publication date shown in the text read, read 13 September 2026: section 18.2's rule that a prompt payment discount is taxed on the amount actually paid, which forces the invoice wording to be settled before the terms are agreed.

# payment-terms

## You are given
A folder from a UK hospitality business containing any of: the merchant settlement statements for the last full calendar month, the bank statement for the same month, delivery platform payout reports, a list of function deposits and account customer invoices, the supplier invoices and order forms with whatever terms are printed on them, the signed supplier agreements, and a note of the owner's own overdraft or card rate taken from a bank statement. A text file may carry any published payment performance figures already looked up for a large supplier, and the Bank of England Bank Rate in force on 30 June and 31 December as stated in the skill's own source note. Assume the printed terms and the direct debit dates disagree, and that some suppliers have no written terms at all.

## Produce
Write into an `output/` folder next to the inputs:

1. `cash-in.csv` with these columns in this order: `Source` (card takings, cash banked, delivery platform, function deposits, account customers), `Sale date used`, `Cash landed date used`, `Typical days to cash`, `Monthly value (GBP)`, `Source file`. Card takings take the settlement date from the merchant statement, never the sale date.
2. `supplier-terms.csv` with columns: `Supplier`, `Account number`, `Monthly spend net of VAT (GBP)`, `Written term exactly as printed`, `Document it was printed on`, `Document date`, `Payment 1 invoice date`, `Payment 1 left the account`, `Payment 1 days`, `Payment 2 invoice date`, `Payment 2 left the account`, `Payment 2 days`, `Payment 3 invoice date`, `Payment 3 left the account`, `Payment 3 days`, `Observed term (days)`, `Term to quote back`, `Bank line reference`. No row may read `unknown` or `as agreed`; a supplier with no document and no bank line goes to `not-evidenced.csv` instead.
3. `end-of-month-dates.csv` with columns: `Supplier`, `Term exactly as printed`, `Invoice dated the 1st`, `Due date`, `Days`, `Invoice dated the 29th`, `Due date`, `Days`, `Day range`, `Reading confirmed by the supplier` (yes / no / asked DD Month YYYY). The shorthand `EOM` or `end of month` must never appear on its own anywhere in the output.
4. `gap-ranking.csv` with columns: `Rank`, `Supplier`, `Monthly spend net of VAT (GBP)`, `Cash-in days`, `Supplier payment days`, `Gap (days)`, `Pounds-days`, `Funded from the overdraft` (yes/no). Sorted by `Pounds-days`, highest first.
5. `discount-pricing.csv` with columns: `Supplier`, `Discount %`, `Days brought forward`, `Discount divided by (100 minus discount) %`, `Stretches per year (365 divided by days)`, `Annual equivalent %`, `Owner's own borrowing rate %`, `Where that rate came from`, `Beats the borrowing rate` (yes/no), `Working`. The `Working` column shows the arithmetic in full.
6. `statutory-position.csv` with columns: `Supplier`, `Contract names its own interest rate` (yes / no / not supplied), `Clause number`, `Document and date`, `Reference date used` (30 June or 31 December), `Bank Rate on that date %`, `Source of that Bank Rate figure`, `Statutory rate %`, `Debt band`, `Fixed sum (GBP)`. The fixed sum is £40 up to £999.99, £70 from £1,000 to £9,999.99, and £100 at £10,000 or more. Where the inputs do not state the Bank Rate for the reference date, leave the rate and the statutory rate columns empty and write `Bank Rate for the reference date not supplied` in the source column.
7. `ask-<supplier-slug>.md` - one file for each of the top three rows of `gap-ranking.csv`. Exactly five lines, in this order: the terms today, the terms wanted with a date, what is given in return, the fallback that will be accepted, and the point at which the business stops buying from them. Each file states the pounds-days gap it is meant to close.
8. `vat-wording.md` - the intended prompt payment discount line for the invoice, written once, with a note naming the accountant as the person who approves it before the first discounted invoice goes out.
9. `not-evidenced.csv` with columns: `Supplier`, `What is missing`, `What was looked for`, `Where it was looked for`.
10. `README.md` - the files read, the calendar month covered, the number of suppliers in the table, the number in `not-evidenced.csv`, and the review date 90 days out.

## Rules
- Only a document or a bank line goes in the supplier table. Never record a term from memory, from a phone call or from what a rep said. A supplier with neither goes to `not-evidenced.csv`.
- Every `end of month` term is written out as two worked calendar dates and a day range. The shorthand never stands alone.
- Never put a discount anywhere in the output without its annual percentage and the arithmetic beside it.
- Never state a statutory interest rate without naming the reference date it was taken from, 30 June or 31 December, and the Bank Rate in force on that date. Never take the rate from today's Bank Rate.
- Never calculate a statutory interest entitlement, a daily amount or a fixed sum from a rate that is not stated in the supplied inputs or in the skill's own source note. If the rate for the reference date is not stated, leave the cells empty and say so.
- Where a contract names its own rate of interest, record that in the row and calculate no statutory figure for that supplier at all.
- Never draft a demand, a letter before action or an interest claim. `ask-<supplier-slug>.md` asks for terms and offers something in return; it never threatens and never quotes an interest figure.
- Never ask for longer terms and a lower price in the same sentence.
- Purchase figures go in net of VAT and are labelled as such. Every figure traces to a named invoice, statement, merchant statement, bank line or signed document.
- Round only at the point of display, to two decimal places.
- Use British English, £, and DD Month YYYY dates. No em dashes.
- The output is a working document prepared for the owner's solicitor and accountant to check. Payment terms are contract terms, the interest position is a legal right a contract clause can remove, and the VAT treatment of a discount is a tax matter. Write no sentence that presents any of it as legal or tax advice.

## Return
A list of the files written with their absolute paths, the number of suppliers with both a written and an observed term, the top three rows of `gap-ranking.csv` with their pounds-days figures, every discount with its annual percentage, the statutory rate used with its reference date and the Bank Rate behind it or the words `not supplied`, and every supplier in `not-evidenced.csv`.