How to stop chasing invoices and start getting paid
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.
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.
We spoke to accountant Peter Knight and small business owner Louise Lashlie about how to prepare now for the end of JobKeeper on 28 March 2021.View more
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