With the Reserve Bank of Australia putting interest rates up again for the fourth time this year, plenty of households and businesses are feeling the squeeze. Higher loan repayments and rising costs leave less money available to cover other expenses. When that happens, getting paid on time starts to slip as customers delay paying some of your invoices.
According to the Australian Small Business and Family Enterprise Ombudsman, simply getting paid on time remains the most common reason small businesses ask for help. Late payments don’t just hurt your bank balance. They can leave you struggling to pay your own bills, delaying wages, or borrowing money to cover the shortfall.
The good news is that most late payment problems can be reduced with a few simple habits.
These include:
- Set clear terms from the start
- Ask for money upfront where you can
- Invoice straight away
- Make it easy to pay
- Follow up early, and follow up every time
- Know when to stop
- Watch the numbers
To get paid on time, set clear terms from the start
Make your payment terms clear before the work starts, not when the invoice goes out. Include them in your quotes, contracts and invoices so customers know exactly when payment is due and what’s expected of them.
If your standard terms are 14 days, make sure customers know this before agreeing to the job. If you regularly give customers 30 days to pay but find most are happy to pay within 7 days, consider shortening your terms. Just make sure any changes are agreed upon upfront.
Clear terms help avoid confusion and give you something to refer to if a payment is late.
Ask for money upfront where you can
Deposits and progress payments can help reduce the amount of money tied up in a job and keep cash coming in while work is under way. This is particularly useful for larger projects where you might need to pay for materials, equipment or subcontractors before the customer pays you.
A tradie might ask for a deposit to cover materials before starting a renovation, with further payments due as various stages of the job are completed. A consultant working on a three-month project could invoice at the end of each month rather than waiting until the entire project is finished.
Agree on the amounts and payment milestones before work begins, so both parties know what to expect.
Invoice straight away
The longer you wait to send an invoice, the longer you wait to be paid. Even if you’ve finished the work or delivered the goods, you can’t expect payment until you’ve sent the customer an invoice.
Get into the habit of invoicing as soon as the work is completed or the goods are delivered, rather than leaving it until the end of the week or month.
Check that each invoice includes the correct amount, payment terms and payment details. Missing information or errors can create unnecessary delays if a customer needs to ask questions or request a corrected invoice.
Make it easy to pay
The fewer steps a customer needs to take to pay you, the easier it is for them to get it done. Include clear payment instructions on every invoice and offer convenient payment options where possible.
For example, adding a payment link lets customers pay by card in a few clicks (in Xero, connecting a payment service such as Stripe adds a Pay now button to your invoices), while direct debit can be useful for regular payments. If you accept bank transfers, make sure your account details are easy to find on the invoice.
Follow up early, and follow up every time
Don’t wait until an invoice is weeks overdue to follow up. Set up automatic reminders in your accounting software (Xero calls these invoice reminders) so customers get a friendly nudge before and after the due date.
If an account is more than a week or two overdue, pick up the phone. A quick call can help you find out if the customer has missed the invoice, has a question or is having trouble paying.
The key is to follow up every time. Consistent reminders help keep payments on track and stop smaller amounts from slipping through the cracks, so you can get paid on time.
Know when to stop
If a customer keeps paying late, it’s fine to pause further work until their account is up to date. Continuing to work for someone who doesn’t pay you only increases what you stand to lose.
You could agree on a payment plan or ask for payment upfront for future work. Before pausing work, check your contract and any relevant obligations, and communicate clearly with the customer about the next steps.
If an account still isn’t paid, the usual next steps are a formal letter of demand, then a debt collector or a minor debt claim through QCAT for amounts up to $25,000. If you’re in the building industry, you may also be able to make a payment claim under Queensland’s security of payment laws.
Watch the numbers
Make time to review your accounts receivable regularly. Your aged receivables report shows which customers owe you money, how much they owe and how long each invoice has been outstanding. This helps you spot late payments early and decide which accounts need attention first.
If the amount customers owe you keeps growing, even as sales increase, it could be a warning sign. The longer payments take, the less cash you have available to cover your own bills.
Set aside time each week to check overdue invoices and follow up on outstanding amounts. Our article Cashflow vs Profit explains why making a profit doesn’t necessarily mean you have cash available in the bank.
A quick summary to help you get paid on time
| Simple habit | What to do |
| Set clear terms from the start | Agree on payment terms upfront and include them in your quotes, contracts and invoices. |
| Ask for money upfront | Use deposits and progress payments to keep cash coming in while work is under way. |
| Invoice straight away | Send accurate invoices as soon as work is completed or goods are delivered. |
| Make it easy to pay | Offer convenient payment options and include clear payment instructions. |
| Follow up early and every time | Set up automatic reminders and call customers if invoices become overdue. |
| Know when to stop | Consider pausing further work for customers with overdue accounts until payment arrangements are in place. |
| Watch the numbers | Review your aged receivables report weekly to spot late payments and cashflow risks early. |
Questions to ask yourself
- How much am I owed right now, and how much of it is overdue?
- Who are my slowest-paying customers, and is the work worth it?
- How long after finishing a job do I send the invoice?
- Do I take deposits or progress payments on larger jobs?
- When was the last time I actually called a customer about an overdue account?
You can’t control when every customer pays, but you can take steps to keep cash coming in and make rising costs easier to manage.
Need a hand?
If chasing money is taking up too much of your time, talk to us. We can help you set up a simple process that gets you paid faster, with less effort.
This article is general information only and doesn’t take into account your personal circumstances. Please speak with us before acting on it.
