Hammond, who supported remaining in the EU at last year's referendum, is seen as the voice of a so-called 'soft Brexit' within Prime Minister Theresa May's cabinet, favoring prioritizing trade ties with the EU over curbing immigration.
He has repeatedly talked about the need for a transitional deal, saying such an arrangement would see Britain replicate as much as possible the existing arrangements in order to minimize the impact on business.
"Five weeks ago the idea of a transition period was quite a new concept, I think now you would find that pretty much everybody around the cabinet table accepts that there will be some kind of transition," Hammond told the BBC's Andrew Marr show.
"We're into a real process now with the start of negotiations and I think you'll find the cabinet rallying around a position that maximizes our negotiating leverage and gets the best possible deal for Britain."
Brexit minister David Davis is due in Brussels on Monday for a first full round of Brexit talks.
Hammond said the government needed to provide as much clarity as possible, as soon as possible, to restore business and consumer confidence and get the economy moving.
"It is absolutely clear that businesses, where they have discretion over investment, where they can hold off, are doing so and you can understand why, they are waiting for more clarity about what the future relationship with Europe will look like," he said.
Hammond said the length of any transitional period would depend on how long is needed to get new systems in place to handle areas such as customs and immigration, but it should be a defined period and was likely to need to be "a couple of years".