7 ways to improve your SME's treasury

The problem: Portuguese SMEs wait months to get paid

Payment terms of 60 days or more are common in Portugal, and many customers pay later still; Banco de Portugal publishes the average collection period by sector on BPstat. While you wait, you still have to pay wages, suppliers, taxes, and rent. This gap is the main cause of treasury problems.

The good news: there are concrete strategies to close this gap without creating more debt.

1. Reduce your DSO (Days Sales Outstanding)

DSO measures how many days it takes, on average, to get paid by customers. Every day less frees up capital.

• Invoice immediately after delivering the service or product
• Offer an early-payment discount (2% for payment within 10 days, for example)
• Send automatic reminders 7 days before the due date
• Negotiate shorter terms with new customers (30 days instead of 60)

Calculate your current DSO with our free calculator →

2. Increase your DPO (Days Payable Outstanding)

If you pay suppliers in 15 days but get paid in 60, you run a 45-day deficit. Negotiating longer terms with suppliers is legitimate and common.

• Negotiate 45-60 day terms with regular suppliers
• Use confirming to extend the term without hurting the supplier
• Batch payments on fixed dates (e.g. the 15th and the 30th)

Calculate your DPO → | What is confirming? →

3. Advance receivables with factoring

If you hold term invoices from reliable customers, you can get the money 1 to 2 business days after a bank or funder approves. It is not a loan: it is simply getting paid earlier for what you are already owed.

How factoring works → | Factoring vs Overdraft: which costs less? →

4. Reduce customer concentration

If more than 25% of your revenue comes from a single customer, your treasury depends on their financial health. If that customer delays payments, the impact is devastating.

• Diversify your customer base: aim for no customer above 20%
• Monitor the payment behaviour of your largest customers
• Keep reserves equivalent to 2-3 months of fixed costs

Assess your concentration risk →

5. Control fixed costs

High fixed costs mean you need more revenue to reach break-even. Review:

• Rent and premises: do you really need that office?
• SaaS subscriptions: how many are you actually using?
• Staff: can you convert fixed costs into variable ones (freelancers, outsourcing)?

Calculate your break-even point →

6. Run weekly cash-flow forecasts

Most SMEs only discover they have a treasury problem when the balance goes negative. A simple weekly forecast (expected inflows vs committed outflows) avoids surprises.

7. Use digital tools to monitor

Bringing your invoices into a treasury-management platform lets you see, in one place: DSO, DPO, receivables ageing, customer concentration, and deterioration alerts. No spreadsheets, no surprises.