6 ways to get paid faster

Six ways businesses can encourage clients to pay their invoices quicker 

Cashflow is incredibly important for businesses. Having enough cash available means you can cover day-to-day expenses, pay employees and suppliers, meet tax and super obligations, and invest in equipment or other areas of the business when needed.

One issue that can put pressure on cashflow is the time between completing work, sending an invoice and actually receiving payment. Even where sales are strong, delays in getting paid can make it harder to manage the timing of outgoing payments.

Your invoicing process can make a difference. Sending invoices promptly, setting suitable invoice payment terms, making payment straightforward and following up overdue invoices consistently can all help reduce unnecessary delays.

The systems behind your invoicing matter as well. Accounting software and connected business apps can automate parts of the process, reduce manual handling and make it easier to see what has been invoiced, what has been paid and what is still outstanding.

These six practical changes can help shorten the gap between completing the work and getting paid.

1. Reduce delays in invoicing 

It’s a simple tactic, but sometimes an invoice does not get raised as soon as the work is completed. The longer it takes to send the invoice, the longer you are likely to wait to receive payment.

Where possible, invoice within one or two days of completing the work. If your payment terms are 14 days and you wait another five days before sending the invoice, you have already extended the period between doing the work and receiving the money.

It is also worth reviewing what happens between completing the work and creating the invoice. If someone needs to manually transfer job information from one system to another, check details or wait for information before the invoice can be prepared, there may be an opportunity to improve the process.

Accounting software and connected apps can help automate invoicing in the right circumstances, particularly for recurring invoices or businesses that regularly bill the same clients. A good invoicing system can also help you keep track of customers and amounts owing.

If invoicing is taking longer than it should, First Class Accounts Ovens & Murray can review your current process and help identify where bookkeeping systems or suitable business apps could reduce unnecessary manual work.

2. Encourage part payments 

Another option is to request some payment before the work is completed.

Depending on your industry and the type of work you provide, you might ask for a deposit before work begins, with the balance payable on completion. For longer projects, progress payments at agreed stages may be more appropriate.

This can reduce the amount of time your business carries the cost of labour, materials and other expenses before receiving payment from the client. It can also make the timing of incoming payments better reflect the costs you are incurring as the work progresses.

The arrangement should be agreed with the client from the beginning and reflected in your payment terms. Australian Government guidance includes upfront payments, instalments and payment within an agreed number of days as examples of payment terms businesses can use.

Accurate bookkeeping then helps you keep track of deposits, progress invoices, amounts received and balances still owing.

3. Make it easy for clients to pay  

Making payment straightforward can help remove another potential delay from the invoicing process.

Depending on your business and your customers, payment methods may include bank transfer, credit or debit card, direct debit or online payment links. The right options will depend on how your business operates, the costs involved and how your clients prefer to pay.

Whatever payment methods you offer, make them easy to find. Clients should be able to look at the invoice and understand how to pay without searching through previous emails or contacting you for payment details. We also recommend including accepted payment methods as part of your payment terms.

Payment apps and integrations can also reduce manual steps between invoicing and payment. First Class Accounts Ovens & Murray can help assess how your existing accounting software and apps work together and whether another setup would better suit your invoicing process.

4. Set up automatic invoice reminders 

Sometimes an unpaid invoice has simply been overlooked. A consistent reminder process can help follow up those invoices before they remain outstanding for an extended period.

Depending on the accounting system or invoicing app you use, reminders may be scheduled around the invoice due date and again once the invoice becomes overdue. This reduces the need for someone to manually review outstanding invoices and send individual reminders each time.

Automation does not mean removing people from the process completely. There still needs to be a process for reviewing outstanding accounts and following up directly when an invoice remains unpaid.

We suggest starting overdue payment follow-up with a polite reminder and discussing a payment date or payment schedule where appropriate.

Regular bookkeeping is important here as well. When your accounts are kept up to date, you can see which invoices are outstanding and identify payment delays sooner.

First Class Accounts Ovens & Murray can manage the bookkeeping behind this process and help ensure your invoicing systems provide reliable information about what is still owing.

5. Review your invoice payment terms 

Another way to reduce the time between invoicing and payment is to review how long customers currently have to pay.

If your business uses 60-day payment terms, consider whether that timeframe still suits the way the business operates. Depending on your industry and client relationships, 45-day, 30-day, or shorter terms may be more appropriate.

Shorter payment terms can reduce the period your business is effectively funding completed work while waiting to be paid. However, the terms still need to be realistic for the type of work you provide and the customers you deal with.

It may be easier to introduce revised terms when taking on new clients. If you are changing arrangements with existing clients, review the agreements already in place and communicate any proposed changes appropriately.

Payment terms form part of the sales contract and should explain when payment is expected, which payment methods are accepted and how overdue payments will be handled.

It is also worth looking at the invoicing process as a whole. Shorter payment terms will have less impact if there is still a lengthy delay between completing the work and issuing the invoice.

6. Consider late payment fees

If late payment is an ongoing issue, you may want to consider whether late payment fees are appropriate for your business.

Any conditions relating to late payment should be established as part of the agreed payment terms rather than introduced after an invoice has already become overdue. If you have an existing written contract, the payment conditions and the agreed approach to late payment should be checked before taking further action.

Businesses also need to ensure their contract terms comply with applicable laws. Australian Consumer Law protects consumers and small businesses from unfair contract terms in standard form contracts, with penalties applying where businesses propose, use or rely on unfair contract terms covered by the legislation.

If you are considering adding late payment fees to contracts or changing existing contractual terms, obtain appropriate legal advice to make sure the terms are suitable for your circumstances.

Late payment fees should also sit within a broader invoicing process. Prompt invoicing, appropriate payment terms, straightforward payment options and regular follow-up may help reduce the number of invoices that become significantly overdue in the first place.

Make invoicing part of your cashflow process

Getting paid quicker is one part of managing business cashflow. It is also important to know what has been invoiced, what has been received, what remains outstanding and which payments the business needs to make in the weeks ahead.

If invoices are regularly delayed, overdue accounts are difficult to track or too much of the process relies on manual follow-up, it is worth looking at the systems behind the problem.

Accurate bookkeeping gives you reliable information about money coming into and going out of the business. Suitable accounting software and connected apps can also reduce repetitive administration and make invoicing processes easier to manage.

First Class Accounts Ovens & Murray can help with the bookkeeping behind your invoicing process, review how your current systems are working and recommend suitable business apps where there is an opportunity to improve the process.

If getting paid is taking longer than it should, talk to First Class Accounts Ovens & Murray about improving the bookkeeping and systems that support your business cashflow.