Late payments can quietly wreak havoc on small businesses, one in three Australian SMEs are left waiting over 60 days to get paid. It’s more than a cash flow issue.
It slows growth, piles on stress, and puts your business at risk. But you’re not powerless. In this week’s Let’s Talk, we’re catching up with finance experts and business owners who’ve lived through the wait. They’re sharing real, practical strategies to help you get paid faster, from smart payment terms to automated tools that follow up so you don’t have to.
So pour yourself a coffee and jump in, we’re tackling late payments head-on. Let’s Talk!
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Angad Soin, Managing Director ANZ & Global Chief Strategy Officer at Xero
“Making it easy for your customers to pay in their preferred way is one of the most effective ways to reduce late payments.
“Australian consumer preferences are shifting toward digital payment methods like credit cards, online payments and mobile wallets, and they expect businesses to keep up. Unfortunately, as Xero’s ‘I want to pay that way’ report shows, there’s often a disconnect between how customers want to pay and the options small businesses provide. For instance, while 86% of Australians prefer using cards, only 55% of small businesses currently accept them. That gap can result in delayed payments — or worse, customers choosing to shop elsewhere.
“That’s why offering flexible and convenient payment options is so important. Contactless methods like Tap to Pay make it easy for customers to pay on the spot, directly from your phone. For online transactions, including a simple “Pay Now” button powered by tools like Stripe & GoCardless can streamline payments and reduce the time spent chasing overdue invoices.
“By embracing digital payments, you’ll get paid faster, improve cash flow, and spend less time following up late payments — giving you more time to focus on growing your business.”
Paul Koopmans, Vice President Commercial ANZ at Worldpay
“Businesses can mitigate late payments by ensuring that customers are offered a variety of payment methods that they can choose from, that best suit their needs. More and more Australians are choosing flexible ways to pay, with Buy Now, Pay Later (BNPL) accounting for 15% of all eCommerce transaction value in Australia in 2023. By offering BNPL as a payment option, businesses are not only meeting evolving customer expectations but also providing customers with alternative payment options that offer longer repayment terms.
“Proactive communications, such as sending payment reminders before the due date, can also help prevent forgotten or missed payments. Ensuring the checkout process itself is straightforward, secure, and easy to navigate minimises friction that might otherwise cause delays.
“Businesses that treat payments as part of the customer experience, not just backend admin, will build loyalty and keep the checkout journey as easy as a click.”
Anthony Capano, Regional Director of ANZ at Intuit Mailchimp
“The key is clear, consistent communication. Set the tone early with friendly reminders about upcoming due dates. Automated emails can do some of the heavy lifting, but timing alone isn’t always enough–personalisation matters, too.
“A reminder that includes key invoice details and a warm, helpful tone can make the ask feel like a nudge, not a demand. And don’t discount the value of regular, thoughtful touch points with your customers outside of invoicing, either. Building a strong rapport with customers in between purchases or payments can lay the groundwork for more positive interactions moving forward.”
Gus Gilkeson, CEO at Grow Capital
“Firstly, determine whether the late payment is because the client/business can’t pay or simply won’t. If they don’t have the funds, discuss a payment plan or new terms, or potentially offer to introduce them to a lender or broker to consider funding options. But if you determine that they’re unwilling to pay, you can expedite the process—whether that’s referring to a third party or reporting them to a credit agency.
“Other steps to consider:
- Determine the Relationship: If you’d like to maintain the relationship, you may be more open to renegotiating payment terms. If not, take stronger action sooner.
- Open Communication: Don’t just re-send an invoice and hope it’ll be paid. Be direct about your expectations and document all communication so there’s no doubt about what you’ve asked for and when.
- Agreement Terms: Include clauses that allow reporting to a credit agency for non-payment—this helps deter repeat offenders.
- Automate the Process: Small operators might feel it’s not worth chasing small amounts. Use tech tools to work smarter—automate reminders, demand letters, and offer flexible payment options to ease the process.”
Annette Densham, Award writing specialist, Annette Densham Award Writing Services
“Late payments are the bane of a small business owner’s existence. If you’re a sole operator, it can feel awkward to be chasing the money AND doing the work. We rely on prompt payments because the buck stops with us. With cashflow as king, late payments can cause serious problems in a small business so it’s important to have solid terms and conditions with your invoicing. And reinforce them.
“If you are a service-based business, have a ‘stop work’ clause until payment is received. It’s interesting how many businesses want the work done and then dilly dally over payment. This stop work clause, when put into action, often sees the invoice paid when there is a deadline at stake.
“Emails can be ignored. Text messages can be forgotten. There’s nothing like picking up the phone to chase up a late invoice. You can then have a conversation about the late payment.”
Carl Warwick, Regional Sales Director APJ at BillingPlatform
“Late payments can quickly strain small businesses’ cash flow. The first step is to set clear payment terms upfront, including due dates, late fees, and escalation procedures. Sending invoices promptly and following up with automated reminders helps reinforce expectations and keeps payments top of mind.
“Segmenting customers by payment behaviour is also effective. Low-risk customers may just need a nudge, while chronic late payers might require a more hands-on approach. Establishing a simple collection workflow—like a reminder after five days, a call after 10, and service suspension at 30—adds consistency and structure.
“Small businesses can also use “promise to pay” agreements to pause collection activity when a customer commits to a new payment date. This builds goodwill while maintaining accountability. It’s also important to monitor results: Are reminders working? Are follow-ups happening on time? What actions lead to payments?
“Technology doesn’t have to be complex or expensive. Even basic tools that automate reminders and offer visibility into past-due accounts can reduce manual work—and stress. With a more structured, proactive approach, small businesses can improve their chances of getting paid on time and protecting their cash flow.”
Kyle Willersdorf, Account Director ANZ at GoCardless
“According to our Pursuing Payments Report, 87% of Aussie SMBs are facing cash flow woes and over half are bracing for even more late payments this year. A quarter lose up to $6,000 yearly from late payments, with one in ten bleeding between $12,000-$30,000. Using outdated payment methods simply won’t cut it anymore.
“Here’s what can help businesses right now:
- Set clear payment terms – Set plain deadlines from the start and ask for up-front cash. We’re seeing businesses that ask for 20-30% up front stay healthier through tough months.
- Move to PayTo now – Unlike credit cards that fail 10-15% of the time due to expirations or fund issues, PayTo pulls cash straight from bank accounts with bank-grade checks at digital speed. This means more reliable cash flow without the stress of declined payments.
- Sync payments with bookkeeping – This can save up to 20 hours weekly for small businesses.
- Reward prompt payment – Even small discounts can encourage customers to pay sooner, helping you avoid awkward, time-consuming conversations.
“You can’t wait for change. Businesses that move to smart pull-based payment tools now will best protect their future bottom line.”
Adam Henderson, Partner, Corporate and Commercial at Hicksons Lawyers
“Having effective strategies in place for managing late customer payments is crucial from the outset due to its significant impact on cash flow and business operations.
“The first step is making sure you are set up correctly. Establish clear payment terms in written contracts – including due dates, late fees, and consequences for non-payment. Also, consider how you structure payments – you could use a deposit (this helps to reduce payment default risk), or an instalment approach. Seek to avoid all funds being payable after you have fully delivered your services or goods.
“Offering early payment discounts can help to achieve prompt payment – these incentives can be included in your contract or even in the invoice.
“Also consider if you can secure your interest against the property of the customer. This could be done by registering a ‘security interest’ on the Personal Property Securities Register (PPSR).
“If payments become overdue, then a courteous reminder can be sent. If this does not resolve the matter, then a formal ‘letter of demand’ can be issued. Payment plans can maintain relationships while allowing eventual payment. Consider implementing late payment fees as outlined in your contract.
“You should also clearly document all communications – this creates an evidence trail if litigation follows or if you refer the matter to a debt recovery agency.”
Percy Hung, CEO & Founder at Choco Up
“Cash flow is the backbone of business stability, and for small businesses, late payments don’t just slow operations; they constrain growth.
“To manage this risk, businesses must move beyond reactive measures and invest in structured, proactive systems. That begins with clarity: setting transparent payment terms, reinforcing them consistently, and following through with discipline. Practices like incentivising early payments and automating reminders are not just operational niceties, they are foundational to building predictability into the business model.
“More broadly, business owners may need to rethink how they frame cash flow – not as a finance function, but as a strategic enabler. In markets where payment cycles are getting longer while business costs remain immediate, bridging that mismatch is no longer optional. That’s where utilising innovative financing services can provide a much-needed buffer against cash flow disruptions caused by late payments.
“Alternative financing solutions, such as trade financing (which we offer at Choco Up), can provide immediate access to crucial funds since it’s specifically designed to bridge the gap created by delayed payments, particularly in the realm of international trade.”
Josh McNicol, Director of Growth at Zeller
“There is an estimated $2.17B owed to Australian small business owners in late payments. The solution lies in setting clear payment terms aligned to your business needs, and utilising technology to reduce the administrative burden of chasing late payments. Electronic invoicing software that triggers automated reminders to customers with upcoming (or overdue) payments eases the burden, and accelerates payments. For example — 75% of businesses sending invoices with our platform see payments made in under 24 hours, boosting cash flow and reducing late payments. When businesses incur costs before services are delivered (such as events or hospitality), aligning payment terms with outgoings can be the difference between resilience and stress.
“Offering other flexible payment options, such as sending payment links directly to a customer’s mobile via SMS, can also help accelerate payment — the easier it is to pay, the more likely customers are to take action faster.
“It’s equally important to monitor outstanding invoices regularly. Real-time visibility into receivables empowers operators to make informed decisions around staffing, inventory, and marketing spend. It also reduces reliance on personal savings or short-term credit to fill gaps caused by delays.
“In a sector where margins are slim and trading conditions shift quickly, timely payments are fundamental to your financial health.”
Chris Ponton-Dwyer, Director of Enterprise Sales at Zepto
“The best way small businesses can reduce late payments is by adopting real-time payment solutions through the New Payments Platform (NPP), such as PayTo, PayID or invoicing platforms that offer these options.
“PayTo offers real-time customer authorisation, giving businesses immediate confirmation that account details are correct and funds are available. This reduces the risk of chargebacks, or disputes and failed transactions caused by incorrect details.
“PayID lets businesses receive payments instantly by linking a simple identifier like an email or mobile number to their bank account, making it easier for customers to pay quickly. While even a single business PayID speeds up payment confirmation, using unique PayIDs for each invoice helps automate reconciliation and reduces manual tracking.
“These solutions, offered at a low, fixed fee per transaction, help businesses grow customer relationships without wasting time chasing customers.
“Unlike direct debit through the Bulk Electronic Clearing System, which only processes a few times a day, the NPP operates 24/7, including weekends and public holidays, allowing businesses to receive funds immediately and improve cashflow.
“Our founders understand this challenge firsthand, having run a tourism business where payment delays sparked the idea for Zepto — helping businesses get paid faster and more reliably.”
Nicola Moras, Business Coach, Visibility Expert & Motivational Keynote Speaker, Nicola Moras
“Lack of cash flow will kill a business and fast. Chasing late payments drains time and resources that are better spent attracting new clients and making sales, not cleaning up someone else’s mess.
“The smartest move? Get payment upfront where possible. If that’s not an option, you need a rock-solid system.
“Set clear payment terms from the start. Don’t hide them in fine print, make them visible and understood. Automate your follow ups so you’re not relying on memory (or mood) to chase what’s owed.
“Enforce late fees. Don’t just list them! Make sure you apply them. Consistency builds trust and trains clients to respect your terms.
“If you’re struggling with late payments, offer an incentive for upfront or early payment. A small discount or a bonus can spark loyalty and save you the stress of chasing money later.
“The bottom line? Asking to be paid isn’t rude. It’s necessary. You’re not being pushy. You’re running a business. And a business can’t survive without on time cash flow.”
Jo Burston, Founder and Managing Director at Job Capital
“Late payments can cripple cash flow and for a labour hire firm like Job Capital, which juggles hundreds of debtors each year, staying on top of receivables is mission‑critical. Here are seven action‑packed takeaways to keep your small business paid on time:
- Communicate Proactively with a Three‑Tiered Approach
- Frontline (Payroll & Accounts): Equip your bookkeepers and accounts teams to maintain friendly, fact‑focused check‑ins. They’re the first port of call for queries and can catch hiccups before they become late payments.
- Mid‑Tier (Sales Staff): Schedule regular relationship‑building calls from your sales or account managers. A personal rapport means clients feel invested in keeping you paid—and are more likely to flag potential delays early.
- Executive (Directors): When a payment stalls, have a director‑level call to reinforce the partnership at the top. This shows you take the relationship seriously—and often prompts swift action on overdue invoices.
- Set Crystal‑Clear Terms
Spell out payment deadlines, late‑payment fees and invoicing schedules up front. When clients know the rules, you’ll spend less time chasing cash. - Automate Your Invoicing
Invest in simple billing software that fires off invoices and reminders automatically. Job Capital’s streamlined system nudges debtors weekly – no manual follow‑ups required. - Enforce Late Fees
Charge a clear, fair fee – say 1.5% per month – on overdue balances. A little extra cost compels clients to prioritise your invoice over other bills. - Build a Cash‑Savvy Finance Team
Ensure your bookkeepers and payroll pros not only crunch numbers but truly understand your cash cycles and debtor behaviours so that every pay run aligns with incoming funds. - Vet New Clients Rigorously
Make compulsory credit checks standard practice for all new small customers. Require director guarantees where appropriate to reinforce commitment. - Offer Flexible Payment Options
Enable credit‑card facilities for both the business account and a director of the debtor company so that even tight clients can settle invoices instantly.
“By embedding these steps into your workflow, you’ll turn slow‑paying clients into punctual payers and keep your business humming.”
Rahul Bahl, Principal Consultant at ERA Group
“Late customer payments directly impact working capital by reducing available cash for day-to-day operations—but they don’t have to derail your business. It’s a timely opportunity to tighten your working capital strategy and strengthen customer relationships.
“At ERA Group, we help businesses turn this challenge into a smart advantage. Here are some key steps:
- Credit check new customers and routinely monitor existing ones for early warning signs.
- Set clear expectations with prompt invoicing, defined payment terms, and open communication to build trust.
- Offer value-driven incentives for early payment or flexible terms for reliable clients—it shows you’re commercially sharp and customer-focused.
- Leverage technology with automated reminders and easy payment options.
- For staged services or long-term projects, use milestone or progress payments to keep cash flowing without straining the customer.
“Managing receivables proactively strengthens your working capital position and puts you in control of your cash and growth. With the right systems and mindset, late payments don’t just get managed—they get outpaced.
“At ERA Group, we work alongside you to turn receivables into a competitive edge—helping your business stay ahead, not just afloat.”
Elise Balsillie, Head of Thryv ANZ
“When cash flow stalls, so does momentum and for small businesses, that pause can be costly. However, the solution isn’t to chase harder. It’s to set the tempo early, using smart systems that guide customers to pay promptly without friction, fuss or follow-up.
“More and more businesses are leaning into automation that does more than send reminders. They are creating branded, mobile-first payment experiences that feel effortless, offering multiple ways to pay, scheduling nudges at just the right time and tracking every interaction.
“SaaS tools are also giving business owners the intelligence to act earlier. With real-time insights into who is lagging and why, businesses can adapt payment terms, predict risk and even reward reliability with exclusive perks. It’s personalised finance at scale.
“One of the most important shifts is in mindset, seeing payment as part of the customer experience, not just the final step for a business. When businesses treat invoicing as another opportunity to engage professionally and positively, it changes the tone as it becomes the continuation of great service.”
Beau Bertoli, co-founder and Chief Revenue Officer at Prospa
“Small businesses often fall to the bottom of the payment queue, having to wait longer than larger companies to get paid by customers or clients – impacting their ability to pay staff, maintain equipment and grow.
“The key is preventing your business from getting to this position. Set clear payment terms from the outset and communicate them in writing. Automating invoicing and scheduling reminders can help ensure customers won’t forget due dates. For those who consistently pay late, consider offering early payment discounts or implementing late fees to encourage timely payments.
“It’s also essential to build strong relationships with your customers. A friendly follow-up or honest conversation can resolve payment delays without damaging the relationship. If late payments become a pattern, don’t hesitate to reassess your terms or customer base.
“Being in control of your incoming cash is essential to your overall cash flow management. At Prospa, we work with thousands of small businesses and understand how critical cash flow is to their success. We see time and time again that being proactive, implementing simple strategies, and having the right tools in place can make all the difference.”
Charles Liu, Founder & Marketing Director at Cubic Promote
“Late payments can significantly impact cash flow. Here are the steps we take to manage late customer payments:
- Pre-Sale Communication: Establishing open lines of communication before the sale helps us assess the risk of a client being late with payments. Simple questions, such as “Are you comfortable proceeding under our standard [e.g., 7-day or upfront] payment terms?” can clarify expectations and set clear payment terms from the beginning.
- Post-Sale Communication: After the sale, we implement automated reminders for invoices to keep payments on track.
- Incentives: We offer small incentives for early payments to encourage timely transactions.
- Strategy for Larger Clients: For larger clients, we request milestone payments to better manage cash flow.”
Leanne Bawden, Founder & CEO | Business & Life Coach for Mums, Wildly Grounded Co
“Here’s what I tell my clients. Hoping someone pays you isn’t a business strategy:
- You’re not running a charity. You’re running a business. And cash flow is oxygen.
- Be clear upfront. Payment terms, due dates and late fees aren’t fluff, they’re boundaries. Put them in writing and make them part of your onboarding.
- Automate your follow ups. If you’re manually chasing invoices, you’re leaking time and energy.
- Set up auto reminders and escalation steps. Make it professional, not personal.
- Enforce your late fees. You don’t need to be aggressive but you do need to be consistent. You deserve to be paid on time. Full stop.
- Have the hard convo. If someone’s consistently late, call it out early. Re negotiate or walk away. Chronic late payment is a red flag, not a quirk.
“Bottom line. Late payments aren’t just annoying. They’re a sign you need to lead stronger. Back yourself. Set standards. And stop apologising for running a legit, profitable business.”
Steven Nicholson, Founder of GearChange Business Advisory
“Healthy cash flow is the top concern for small businesses without the luxury of a cash buffer to protect them from variable trading conditions. These tips will help getting late customers pay their debts:
- Streamline invoice processing – Delayed invoicing leads to delayed payments. Automate invoicing to send out promptly and ensure you have clear payment terms.
- Chase outstanding debts – Don’t ignore debts or delegate to junior staff. Business owners tend to have the relationship with the customer which makes the conversation easier.
- Offer payment discounts and alternative payment methods – Incentivise customers to pay by offering a small discount to get cash flowing. Allowing credit card payment may help some customers.
- Implement late payment penalties – The ‘stick’ method compared to the ‘carrot’ of discounts. Penalties must be clearly stated in your sales contract or invoice, so your customer is aware.
- Offer payment plans – Allowing a customer to pay in smaller instalments may work with their cash flow restraints.
- Use external debt collection – Always a last resort as it can be expensive and may damage the relationship with your customer.
“The key to managing late payments is prompt action and communication with the customer. Hopefully these tips will keep the cash flowing.”
Narendra Shukla, Director – Consulting Services at Edwise Consulting
“It’s not a nice situation for any business, but small businesses are more vulnerable. When late payments pile up, small businesses can find their cash flow squeezed, making it tough to pay workers, replenish supplies, or invest in growth. A single overdue invoice can snowball—turning optimism into anxiety and putting hard-earned client relationships at risk.
“To avoid this, it pays to be proactive. Set out your payment terms clearly from the outset, and make sure every invoice is straightforward and accurate. If a payment goes missing, don’t delay; send a friendly reminder. Often, that’s enough to jog someone’s memory. If the delays keep on happening, pick up the phone and have a direct and respectful chat. This can clear up confusion or reveal if your customer is genuinely struggling, in which case a payment plan might help both sides.
“Making it easy for customers to pay via online options or automated reminders, removes barriers and speeds things up. If all else fails, escalate with a formal notice or seek professional advice. By blending empathy with structure, small businesses can keep cash flow healthy and client relationships strong, even when times are tough.”
Caitlin Bell, Copywriter & Psychologist, Bellcopyco
“Strong boundaries start on day zero. Pop your payment terms in your T&Cs, your onboarding emails AND mention them out loud, so there’s zero confusion later. Set clear due dates, outline any late fees, and let clients know what to expect. Don’t assume they’ll read the fine print—spell it out early. Then back it up with friendly reminders before and after invoices are due. Automated tools like Xero can save you from penning awkward, please-cough-up emails, but your process is the real anchor. If someone’s constantly dragging their feet paying invoices, you’ve got full permission to cut ties and protect your time, energy, and bottom line. Your energy and cash flow deserve better!”
Alexander Laureti, Managing Director at LMS Advisory Pty Ltd
“Cash flow is everything. A mentor once told me: “The job isn’t done until the money’s in the bank.” It’s not enough to deliver the work — you need to get paid.
“Start by issuing invoices quickly and making it easy to pay. Use built-in features in Xero or MYOB to automate reminders and reduce friction wherever possible. Consider advanced debtor management tools if your receivables are more than 1 page long.
“Communication is key. Know your customer’s situation — are they experiencing a timing delay or deeper financial trouble? If they’re struggling; get a partial payment ASAP and formalise the rest in a short, written plan. Don’t delay the follow-up; document all agreements to protect yourself legally if it comes to that. Overcommunication is better than none, and be omnichannel if that is possible. Stop work on deliberate bad payers.
“Tailor your approach. Some clients need empathy, others respond only when you’re assertive. When cash flow is tight, people pay who follows up loudest. Delegate the process and make sure it happens often.
“And finally, don’t let receivables drift. Even if your business cash balance is healthy, being “nice” about overdue payments can lead to bad habits that hurt long term. Be fair, be human — but be firm. You’ve earned that income so enforce terms, and systemise the follow-up. Turn income into profit. Your business depends on it.”
David Warburton, Founder & Finance Broker at Rate Challenge
“When someone doesn’t pay—or pays late—it can cause real anxiety. That’s why having a process helps you stay in control.
“There are three stages of lateness. First is when the payment’s just a little bit late—maybe they forgot. A gentle reminder or resending the invoice usually works. Ninety percent of the time, that’s all it takes. Setting clear terms upfront is key. I always say, “I’m not a credit agency.” If you buy a burger, you don’t pay next week—so why should my service be different?
“Some customers are habitually late. That’s when a frank chat helps. “I appreciate your business, but my cash flow matters. If you keep paying late, I won’t be able to work for you.” Often, that’s the nudge they need.
“The worst cases are when they ghost you, refuse to pay, or go bust. Then your options are small claims court, a debt collection agency, or writing it off. I’ve done all three. But the best defence is choosing clients wisely from the start. Trust your gut. If something feels off, it probably is.”
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