How to get your business invoices paid faster: 7 tips to improve cash flow

Why late payment matters

Late payment is the norm rather than the exception for many Australian businesses. When this article was first published, Xero's 2022 cash flow report had found that in 2021:

Missed payment deadlines cost more than angst and inconvenience. The flow-on effect creates inefficiencies right across the business, from accounting to how you allocate your people.

Without the cash coming in, you may not be able to take on new opportunities as quickly as you would like. And every hour spent chasing unpaid invoices is an hour not spent on more important work. Here is how to get paid faster.

1. Send invoices straight away

In short: you cannot get paid until your client has the invoice, so send it as soon as the work is done.

This is the quickest and simplest change you can make. There is nothing wrong with sending an invoice well before it is due, especially if you have agreed to longer payment terms. Pair it with automated follow-ups (see tip 5).

Prompt invoicing also sets a clearer expectation about payment. If you delay sending the invoice, it is hard to expect urgency from your customer when it comes to paying it.

2. Create recurring invoices where possible

If your business has a recurring model, any accounting software can now create recurring invoices that go out automatically.

Better still, attach a direct debit or subscription payment option that takes payment automatically each month. Not every client will agree to pay this way, but it is worth offering.

Take every opportunity to automate sending and following up invoices. That way you only need to step in on specific occasions, not every time.

3. Reduce payment terms and set clear expectations

Unless a client has specifically negotiated their payment terms, keep them as short as you can. A shorter time frame creates urgency and keeps your invoice front of mind.

Set clear expectations from the start. Be open about what your terms are, why they are that length and when the client should expect to receive an invoice from you.

Getting your client's buy-in on paying on time before the project or service begins sets the tone for the rest of the relationship.

4. Offer a wide range of payment options

The key to getting paid faster is removing every friction point and opportunity for delay. With a provider such as B2Bpay, every client can choose the way they prefer to pay.

For example, some providers do not accept American Express, even though many savvy business owners use Amex to build up points on their business expenses. B2Bpay's payment link lets customers pay by Visa, Mastercard, American Express, Apple Pay, Google Pay, PayTo or bank account.

Remove the barriers to payment and you can expect invoices to be paid much faster than if you only offer limited options such as bank transfer. See receiving payments with B2Bpay.

5. Automate invoice reminders

Xero, MYOB and QuickBooks can all send automated invoice reminders at set intervals, either before the due date or once it has passed.

Watch out: in most accounting software, payments made by bank transfer need to be reconciled manually, otherwise reminders will keep going out. It takes seconds to do yourself, or ask your bookkeeper.

Automated reminders speed up the payment cycle and free your time for the rest of the business, rather than keeping tabs on follow-ups.

6. Request prepayments or instalments

For long-term projects or high-value work, it can be much more effective to ask for a deposit, or for instalments tied to milestones.

This improves your cash flow as well as how quickly you are paid. In many industries it is already best practice, so consider whether it could work in your business.

It might be 50% upfront, or a series of instalments triggered when certain tasks or services are completed. Be creative with your invoicing structure so it suits the needs of your business.

7. Simplify your invoice and payment structure

Your goal is to make paying as easy as possible for your client. Review your invoice templates and make sure the information is simple to read and act on. Ask yourself:

• Is a payment link embedded in your invoice?
• Is everything the client needs in one place?
• Can their accounts team pay without having to contact you to understand the invoice?

If you are not sure of the answers, talk to the B2Bpay team about how to fix it.

Using B2Bpay to get paid faster

B2Bpay gives you one platform that accepts all the main payment methods and gives your customers a simpler invoice to pay.

As well as avoiding the knock-on effects of being paid late, you get other benefits, from earning points when your invoices are paid to strong security and local support.

• Customers pay the way they prefer, by card or bank account, from a link on your invoice.
• You can earn points when your invoices are paid.
• Card details are tokenised and the platform is PCI DSS compliant.
• Support from an Australian based team on 1300 205 575.

Combine B2Bpay with the tips above and you can avoid the worrying trend of late payments among Australian SMEs. Get in touch with the B2Bpay team to find out how we can help.