If you run a small or medium business in Nigeria, you probably know this story too well. You land that “big” contract with a major corporation — the kind of deal you’ve been praying for. You deliver on time, even stretching your resources to meet their standards. Then comes the wait.
30 days. 60 days. 90 days. Sometimes longer.
And while the corporation is still “processing your payment,” you’re the one juggling salaries, buying supplies on credit, and praying your vendors give you more time. The bitter truth? Many Nigerian SMEs are not collapsing because of lack of demand, but because of delayed payments strangling their cash flow.
Why This Is a Silent Killer for SMEs
Unlike big corporations with deep pockets, SMEs don’t have endless reserves. Every naira is tied to survival — rent, salaries, raw materials, transport, and debt servicing. When payment delays stretch to 90 or even 120 days, it’s not just inconvenient; it’s crippling.
- Cash flow dries up. Bills pile up while revenue is stuck in “pending.”
- Debt increases. SMEs borrow at high interest rates just to stay afloat while waiting.
- Growth stalls. Instead of reinvesting profits into expansion, all energy goes into survival.
This cycle turns what should be a breakthrough contract into a slow financial drain.
Why Do Big Corporations Do This?
For many large firms, delaying payment is simply a tactic to manage their own cash flow. They hold onto money longer, earn interest, and shift the financial burden onto the smaller supplier.
The irony is, these same corporations depend on SMEs to deliver goods and services that keep their operations moving. But by stretching payment terms beyond reason, they choke the very businesses that support them.
How SMEs Can Survive the 90-Day Trap
While systemic change is needed (like policies enforcing prompt payments), SMEs can take practical steps to protect themselves:
1. Negotiate Clear Payment Terms Upfront.
Don’t just sign because it’s a “big name.” Push for 30-day terms or phased payments. Even if you can’t get everything, negotiate something fairer.
2. Build a Buffer.
Set aside part of your revenue as a cash reserve. It may not cover everything, but it can reduce the pressure when payments delay.
3. Diversify Your Clients.
One of the biggest mistakes is relying on just one big client. Balance your portfolio with smaller customers who pay faster. A mix of cash-flow-friendly clients and larger contracts can keep you stable.
4. Consider Invoice Financing.
Some financial institutions now offer solutions where you can borrow against unpaid invoices. Explore them carefully, but don’t let high interest swallow you either.
5. Price with Delays in Mind.
If you know payments are likely to take months, build that cost into your pricing model. Don’t undercharge and then bleed while waiting.
A Mindset Shift: From Desperation to Strategy
As entrepreneurs, it’s tempting to jump at every “big name” contract for the prestige. But remember: what looks like an opportunity can sometimes be a trap. If the contract terms don’t make sense, be bold enough to walk away. Protect your business first.
Because at the end of the day, a business lives or dies by cash flow, not logos on its client list.
Final Word
The 90-day payment trap is real, and it’s squeezing Nigerian SMEs every day. But with the right strategies — negotiating, diversifying, and planning smarter — you can avoid being strangled by someone else’s timetable.
Big corporations may have the power, but you have the agility. And in business, agility often wins.
So, the next time you’re handed a contract, pause. Ask yourself: Will this grow my business, or will it tie me up in survival mode for the next three months?
Your answer might just save your business.
