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How to stop chasing invoices and start getting paid

Research has revealed a surge in late payments – and late payments getting later. Here, small business owners share their insights on how to collect an outstanding balance.

At a glance

Here’s a snapshot of the advice from our interviewees:

  • Shorter payment terms can prompt faster remittance.
  • Automating invoicing and reminders ensures they reach your customers quickly.
  • A 50% deposit means at least some of the money’s in the bank before services are provided.
  • Credit forms and references show you mean business from day one of the relationship.

Chasing payments ’til you’re blue in the face and red in the accounts? For what it’s worth, you’re in good company. A December 2020 report from the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) shows small businesses across all industries saw a surge in late payments over 2020. As part of that same ASBFEO research, CreditorWatch found late payments were being paid 30.6 days late in October 2020, up from 13.4 days late in October 2019. And that’s on top of payment terms that might already stretch to 180 days. Ouch.

“Vet potential clients before you do business with them. Get them to complete a credit form and call three references.” – Adrian Raftery, Mr Taxman

This deterioration in timely payment and the associated stress on cash flow is one of the many impacts of COVID-19. While government funding has helped many businesses stay afloat during the pandemic, small business owners might be worrying that the trend for unpaid invoices is set to become a habit – part of the new normal. With government support winding back in the coming months, late payments could start having an even bigger impact on solvency.

Late last year, we spoke to small business owners about the creative ways they chase unpaid invoices – like sending a small piece of string with a request they tie round their finger. Read what they had to say here.

We’ve heard this advice was useful – so we checked in with six more small business owners about how they’re managing late payments now. Spoiler alert: debt collectors are a last resort.

Meet the small business owners:

If you’re still waiting on payments, talk to one of our small business lending specialists about how a Prospa Line of Credit could help to ease your cash flow concerns.

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Need flexible access to funds to cover unpaid invoices? We might be able to help. See how a Prospa Line of Credit could ease the pressure.
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Need flexible access to funds to cover unpaid invoices? We might be able to help. See how a Prospa Line of Credit could ease the pressure.

The information in this post is provided for general information only and does not take into account your personal situation. Nothing contained in this post constitutes advice or an endorsement or recommendation of any kind by Prospa. Any links to third party websites are strictly for informational purposes only. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisors. Although every effort has been made to verify the accuracy of the information as at the date of publication, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information for any reason, including due to the passage of time, or any loss or damage suffered by any person directly or indirectly through relying on this information.

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