How to Set Credit Terms That Actually Get You Paid

Ask most small business owners in Bolivia what their payment terms are and you'll get an answer like "30 days, more or less." The more or less is where the cash goes.

Credit terms are one of the few parts of a business that cost nothing to change and affect cash immediately. You don't need more sales, a loan, or a new system to shorten the gap between delivering work and being paid for it. You need to decide what the rules are, say them out loud at the start of the relationship, and apply them consistently.

That's the whole discipline. What follows is how to make each of those decisions deliberately.

The four decisions a credit policy makes

A credit policy isn't a document. It's four answers you should be able to give without hesitating:

Choosing the term

The instinct is to match whatever competitors offer. A better starting point is your own cash cycle: how long after you deliver do you have to pay for the inputs, the salaries, and the taxes on that sale?

If you pay suppliers in 15 days and salaries on the 30th, but your invoice isn't due for 45 days, you are financing your client's business with money you don't have. That gap is the thing to close — and shortening your terms is usually faster and cheaper than lengthening your suppliers'.

Deposits do more work than terms

For any job with material costs or more than a few days of work, a deposit is the single highest-leverage change available. It does three things at once:

• It funds the work so you're not lending the client your working capital.
• It confirms the client is real. A client who won't pay a deposit is telling you something useful, cheaply, before you've spent anything.
• It caps the damage. If the relationship goes wrong, you're arguing over the balance, not the whole amount.

Deposits feel awkward to introduce with existing clients. They're much easier to introduce with the next one — which is the argument for starting now rather than waiting for a policy rewrite.

Discounts, penalties, and which actually works

Two levers exist for changing payment behavior, and they are not equally effective.

The lever that outperforms both: asking on time, every time. A large share of late payments in Bolivian SMEs aren't refusals — they're invoices sitting unnoticed in an inbox. Consistent, unembarrassed follow-up beats any discount.

Making terms real

A term that lives only in your head is not a term. To be enforceable — practically, not just legally — it has to appear in four places:

1. In the first conversation, before the work is agreed. Terms introduced after delivery are a negotiation; terms introduced before are a condition.
2. In the quote or contract, in writing, with the due date and what happens if it passes.
3. On the invoice itself, as a specific date — "Due: October 14, 2026," not "Net 30." Remove the arithmetic and you remove an excuse.
4. In your follow-up, which should start before the due date, not after.

What tightening terms is worth

Consider a business invoicing Bs. 70,000 a month, currently collecting in an average of 52 days:

Roughly Bs. 46,000 freed up — without a single additional sale, without borrowing, and without discounting. It's the same revenue arriving sooner. For most small businesses that's the difference between paying suppliers from the account and paying them from an overdraft.

Start here

You don't need to rewrite anything. Pick the three that apply:

1. Write your terms in one sentence and use the same sentence with every new client.
2. Put an explicit due date on every invoice instead of a term.
3. Add a reminder three days before the due date. This one change moves more money than any penalty clause.
4. Set a credit limit for your three largest clients and check exposure monthly.
5. Require a deposit on the next new project — not on existing ones, just the next.