Practical Tips to Stay on Top of Overdue Receivables
For many small and medium sized businesses, unpaid invoices can quietly chip away at cash flow and confidence. Whether you’re a builder or a lawyer, overdue receivables are more than a nuisance; they can limit your ability to grow, pay suppliers, and invest back into your business.
The good news is that with a few practical systems and habits, you can take control and keep your cash flow healthy.
1. Set clear payment expectations upfront
Before you begin any work, make sure your clients understand your payment terms. Be specific about:
When invoices will be issued
How long clients have to pay (e.g., 7, 14, or 20 days)
What happens if payment is late
Including these details in quotes, contracts, or engagement letters ensures everyone is on the same page from day one.
2. Invoice promptly and accurately
One of the most common causes of late payments is late invoicing. If you delay sending your invoice, clients may delay paying it. Send invoices as soon as the work is completed — ideally on the same day. Double-check that the details are accurate, as errors can slow things down and cause disputes.
3. Make it easy to pay
Offering multiple payment options increases the likelihood of quick payment. Consider including:
Online payment links directly from your invoice
Credit or debit card options
Direct debit arrangements for regular clients
The simpler the process, the fewer excuses for late payment.
4. Follow up early and consistently
A polite reminder a few days before the due date can go a long way. If payment is overdue, follow up immediately. You might start with a friendly email, but don’t hesitate to make a quick phone call if there’s no response. Consistent communication shows you’re serious about being paid on time.
5. Keep a close eye on your aged receivables
Regularly reviewing your aged receivables report helps you spot potential issues early. Pay attention to clients who frequently pay late; it may be time to adjust their terms or require deposits before starting new work.
6. Automate where you can
Accounting software like Xero or MYOB allows you to automate reminders, track overdue invoices, and even reconcile payments automatically. Automation saves time, reduces manual errors, and ensures nothing slips through the cracks.
7. Don’t be afraid to take firm action
If a client consistently avoids payment, you have every right to enforce your terms. This could include charging late fees (if agreed upon), pausing work until the account is settled, or as a last resort, engaging a debt collection agency. It’s about protecting your business, not punishing your clients.
Keep your cash flow strong and your stress levels low
Staying on top of overdue receivables isn’t just about chasing money; it’s about building better systems that support your business growth and financial health.
At Bizdom, we work with business owners across New Zealand from Hawke’s Bay to Auckland to Christchurch and beyond, helping them strengthen their cash flow, streamline their processes, and gain more control over their finances.
If you’d like support setting up smarter systems for invoicing and debt management, or just want to talk through your cash flow challenges, get in touch with the Bizdom team today.