Because each side's terms are set by whoever has the stronger hand. Vendors and distributors sell annual commitments and make you liable whatever your clients do, while clients expect 30 days or more because that's the UK norm and how their payment runs work. The MSP is the only party that sees both sets of terms, so it funds the difference, and nearly every fix is a change to its own contracts and how it collects.
In this article
The short version
- Microsoft's annual New Commerce seats are owed for the full term after a seven-day cancellation window, whether they're billed upfront or monthly.
- Clients expect about 30 days, since 54% of UK businesses selling to other businesses offer 30-day terms as standard, and larger clients may ask for 45 or 60.
- A £9,600 upfront Microsoft commitment billed to the client at £800 a month in arrears leaves you £5,600 out of pocket after six months.
- Bill annual licences in advance where you can, or switch to monthly billing for the annual term at renewal, and match your minimum term to the vendor commitment.
- Take a direct debit mandate at signup, chase overdue invoices with statutory interest at 11.75%, and size an overdraft for what's left from a 12-month forecast.
Why vendors want the year upfront
A vendor that sells a 12-month commitment knows its revenue for the year the day you buy the seats, and it passes the risk of your client leaving down to you. Microsoft's annual New Commerce terms can be billed upfront or monthly, but after a seven-day cancellation window the seats are owed for the full term either way. Distributors, and security vendors such as Bitdefender, expect payment whether or not your own clients have paid you.
It's a sensible way for a vendor to sell through resellers it can't credit-check one by one, and it puts the vendor first in your queue.
Why clients pay on 30 to 60 days
Thirty days is the standard most UK businesses work to: in government-commissioned research, 54% of businesses selling to other businesses offered 30-day terms as standard. Large UK businesses paid their suppliers in a median of 32 days in 2025, and their procurement teams may ask new suppliers to accept 45 or 60.
Clients also pay in batches. An invoice that arrives the day after a payment run can wait weeks for the next one.
And MSPs compete partly on flexibility. A per-user monthly fee that moves with headcount is part of what the client is buying, and asking for a year of licences in advance can make you look harder to deal with than the competitor who didn't ask.
Say you buy a 40-seat annual Microsoft commitment for one client at £9,600, billed upfront, and charge the client £800 a month in arrears on 30-day terms. The first £800 arrives at the end of month 2. By the end of month 6 you've had £4,000 back and are still £5,600 out of pocket, from a client paying on time. On 60-day terms, every payment arrives a month later.
How to close the gap
Each fix below stands on its own, so use the ones that fit your client base.
- Bill annual licences annually in advance. Where a client's seats sit in a 12-month commitment, invoice the client for the year before you buy or renew them.
- Where a client won't pay annually, choose monthly billing for the annual term. Microsoft only lets you change billing frequency at renewal, so diary each renewal date with this decision against it.
- Match your contract to your commitments. A minimum term as long as your vendor commitment, or an exit clause covering committed licence costs, keeps an early exit from landing on you.
- Invoice in advance, not in arrears. Start with new clients and renewals, so nobody has to pay two invoices in one month.
- Take a direct debit mandate at signup and collect on the due date. You set the date, and the amount can change each month under one mandate as seat counts move. Adfin collects by direct debit, card or pay by bank from one payment link, and matches each payment to its invoice in Xero or QuickBooks.
- Price long terms into the deal. If a large client insists on 60 days, charge for carrying it, or bill licences separately on shorter terms.
- Chase every overdue invoice and apply statutory interest where your terms allow. The rate is 8% above the Bank of England base rate, currently 11.75% a year. Adfin's AI Customer Agents can chase over email, SMS and WhatsApp and add statutory interest and fixed compensation from the due date, following rules you set, with grace periods and waivers you control.
- Arrange cover for what's left. Size an overdraft or reserve from a 12-month cash forecast. Adfin doesn't offer invoice factoring or cash advances, so this part sits with your bank.
Fixes 2, 7 and 8 are yours to make today. The rest change what the client signs, so they're easiest at the start of a relationship or at contract renewal.
Common questions
Why don't vendors give MSPs 30-day terms? They sell to large numbers of resellers on standard terms that protect their own revenue, and those terms are rarely open to negotiation for a small MSP.
Is an annual Microsoft commitment always billed upfront? No. An annual term can be billed upfront or monthly, but the commitment for the full term is the same either way.
Will the law force my clients to pay faster? Not yet. The Commercial Payments Bill is still going through Parliament, and the government says a 60-day maximum payment term would start no earlier than 2027.
Can I move existing clients to paying in advance? Yes, though the switch means one month where they pay twice, so it's usually easier at contract renewal or phased in by moving the invoice date forward.
Does a direct debit mandate lock the client in for a year? No. A mandate is open-ended and either side can cancel it, so the minimum term belongs in your contract.
What if a client refuses anything but 60-day terms? Then carrying the client for 60 days is a cost of the deal, which you can price in or offset with a deposit against the commitment you're making for them.
Sources
- GOV.UK (Department for Business and Trade) - Late payments research: understanding variations in payment performance and practices across business sectors and sizes (accurate as of September 2026) https://www.gov.uk/government/publications/late-payments-research-performance-and-practices-across-business/late-payments-research-understanding-variations-in-payment-performance-and-practices-across-business-sectors-and-sizes-html-executive-summary
- GOV.UK (Department for Business and Trade) - Large businesses' payment practices and performance statistics 2025: commentary (accurate as of September 2026) https://www.gov.uk/government/statistics/large-businesses-payment-practices-and-performance-statistics-2025/large-businesses-payment-practices-and-performance-statistics-2025-commentary
- Microsoft Learn - New Commerce Experience cancellation policy (accurate as of September 2026) https://learn.microsoft.com/en-us/partner-center/customers/new-commerce-cancellation-policy
- Bank of England - Bank Rate (accurate as of September 2026) https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
- UK Parliament - Commercial Payments Bill [HL] (accurate as of September 2026)
- Bitdefender - xSP Terms and Conditions for MSPs (accurate as of September 2026) https://www.bitdefender.com/en-us/site/view/xsp-terms-and-conditions-for-msps
