How to Manage Cash Flow When Customers Pay in 60 or 90 Days

Businesses can manage cash flow when customers pay in 60 or 90 days by forecasting incoming payments, maintaining a cash buffer, controlling expenses and aligning outgoing payments with expected collections. Longer payment cycles can create a gap between when you incur costs and when you receive revenue, even when sales are strong.

A structured approach helps you plan for this gap instead of reacting to cash shortages. By tracking receivables, prioritising overdue invoices and planning working capital around actual payment timelines, you can maintain liquidity while continuing day-to-day operations.

Why do 60- or 90-day payment terms create cash flow problems?

Take a UAE trading company that raises an invoice for AED 100,000 on 1 January. If the agreed terms are 60 days, the customer is expected to pay around 2 March. If the terms are 90 days, payment lands closer to 1 April. In the meantime, the company keeps running.

By the time the AED 100,000 comes in, the business has already paid out roughly AED 85,000 to keep operating, two months before that revenue turned into cash. On paper, January showed an AED 100,000 sale. In the bank account, January and February showed a net outflow. This is the timing gap, and it is the reason a business with strong sales and healthy margins can still struggle to cover payroll or pay a supplier on time.

What is the difference between profit and cash flow?

Profit and cash flow are not the same. Profit is recorded when a sale is invoiced, even if the customer has not paid yet. Cash flow reflects the money actually received or paid by the business. This means a business can report a profit for the quarter but still not have enough cash to pay its bills because some customer payments are still pending.

Value Added Tax (VAT) can further affect cash flow management in the UAE. Under the standard time of supply rules, VAT generally becomes due at the earliest of the date the goods or services are supplied, the tax invoice is issued or payment is received. As a result, a business may need to pay output VAT to the Federal Tax Authority before receiving payment from the customer. This can put additional pressure on cash flow while the business waits for the invoice to be paid.

Cash Flow Management for 60- and 90-Day Payment Terms 

A practical guide to managing cash flow when customers pay late.  

Build a 13-week cash flow forecast

A 13-week cash flow forecast in the UAE is a rolling week-by-week view of the coming quarter. Each week has an opening cash balance, expected receipts, committed payments and a closing balance, which becomes the next week's opening balance. It is updated every week rather than left as a one-time exercise, so the numbers move closer to reality as invoices are actually collected or delayed.

Thirteen weeks is a practical window. It is long enough to show a shortfall coming three or four weeks out, which is when there is still time to act, and short enough that the estimates for expected receipts and payments stay reasonably accurate. A forecast stretched over 12 months tends to blur into rough guesswork by the later months, which defeats the purpose of using it to plan cash decisions.

Forecast customer collections

The stated payment term on an invoice is a starting point, not the answer. A forecast is more accurate when it is built from two things together: the invoice due date and how that particular customer has actually paid in the past. If a customer's contract says 60 days but their last six invoices were settled closer to 75 days on average, the forecast should use 75 days for that customer, not the term written into the agreement.

Grouping customers by payment reliability makes this manageable. A customer who consistently pays on or close to term can be forecast at the stated date. A customer with a pattern of running 15 to 30 days late needs that pattern built into the expected receipt date. A new customer with no payment history should be forecast conservatively until a track record exists. This is where a receivables ageing report earns its place, because it shows exactly how each customer has behaved over recent invoices rather than relying on memory.

Prioritise expenses

When the forecast shows a shortfall in a given week, not every expense can wait equally well. Essential spending keeps the business running and carries real consequences if it is missed. This includes salaries, which must be paid through the Wage Protection System by the first day of the following month under current MOHRE rules, rent, statutory payments such as VAT and any supplier commitment tied to goods the business still needs delivered.

Discretionary spending can usually absorb a short delay without immediate harm. This covers non-urgent purchases, marketing spend that is not tied to a live campaign, optional software upgrades and equipment that is not yet needed. 

Improve receivables collection

The simplest lever is to invoice as soon as work is delivered rather than batching invoices at month-end, since every day an invoice sits unraised adds directly to the collection wait. Sending a reminder a few days before the due date, not only after it has passed, also helps, because it gives the customer's accounts payable team time to schedule the payment inside their own process.

Once an invoice is overdue, collection efforts should follow the ageing report. The oldest and largest overdue balances get chased first, since they carry the most risk and the most cash value. A polite reminder at 7 days overdue, a phone call at 30 days and involvement from a senior contact at 60 days is a reasonable escalation path for a business dealing mainly with corporate customers on long terms.

Negotiate better payment terms

Payment terms are usually easier to shape before a deal is signed. For large or custom orders, asking for a deposit at the time of order, say 30% upfront, reduces how much of the AED 100,000 gap the business has to carry and gives some protection if the customer delays or cancels later.

For long projects, splitting the invoice into milestones tied to delivery stages spreads the collection over the project instead of concentrating it all at the end. New customers with no payment history are also a reasonable place to ask for shorter credit periods (30 days rather than 90) until a track record builds trust for longer terms. None of this needs to apply to every customer. It works best where the business still has some negotiating room, typically with smaller or newer accounts rather than a large distributor that already sets the terms.

Develop a working-capital buffer

Working capital is current assets minus current liabilities; in practice, the cash and near-cash a business has to cover its short-term obligations. Because collections on 60- or 90-day payment terms are never perfectly predictable, a business needs a reserve that can absorb a late payment or two without missing its own commitments.

A common guideline is to hold cash reserves equal to one to three months of committed operating expenses, sized to how long the business's own collection cycle actually runs. A company with mostly 90-day customers needs a deeper buffer than one collecting mostly within 30 days. An approved overdraft or short-term credit line can supplement this buffer for a specific gap, but it works best as a backstop for an unusual delay rather than something the business relies on to cover routine monthly shortfalls, since that cost adds up over a full year.

Monitor key cash flow indicators

A handful of numbers give a clear read on where a business stands. Days sales outstanding, the average number of days it takes to collect payment after a sale, shows whether the collection cycle is stable or drifting longer. A receivables ageing report breaks outstanding invoices into buckets such as current, 30, 60 and 90 days overdue, which shows exactly where the risk sits rather than one blended average.

Cash runway, meaning how many weeks of committed expenses the current cash balance plus near-term expected receipts can cover, tells the business how much room it has before a gap turns into a real problem. Comparing upcoming obligations against forecast receipts week by week, drawn straight from the 13-week forecast, is what actually flags a shortfall early enough to act on it.

Invest in advanced accounting software 

Building one manually often requires gathering invoice records, customer payment history and upcoming supplier payments from different sources each week. Accounting software brings this information together as transactions are recorded, making it easier to generate up-to-date receivables ageing, payables ageing and cash flow reports.

These reports provide a factual starting point for forecasting. Instead of estimating collections based on past patterns alone, a business can assess outstanding invoices, their due dates and expected payment timing. TallyPrime consolidates this information in the accounts and generates the relevant reports, giving businesses a current view of receivables, payables and cash movements to support more informed cash flow forecasts.

A business does not eliminate the timing gap between a 60- or 90-day invoice and the cash landing in the bank. What changes with a forecast, a working-capital buffer and closer receivables tracking is how early that gap is seen and how much room there is to act on it before it turns into a missed payroll run or a supplier chasing an overdue bill.