You've done the work. You've delivered the product or service. Now you just need to get paid—but for many businesses, that's easier said than done.

Poor accounts receivable management is one of the biggest cash flow killers for small businesses. Let's fix that with proven strategies to get paid faster.

💡 Pro Tip: Connect HeyDashboards to your Xero account to automatically track these metrics in real-time with beautiful visualizations.

The True Cost of Slow Payments

Before diving into solutions, let's understand what slow payments really cost you:

• Opportunity cost: Money tied up in receivables can't be invested in growth
• Financing costs: You may need to borrow to cover cash gaps
• Admin costs: Chasing payments takes time away from revenue-generating activities
• Bad debt risk: The longer an invoice ages, the less likely you'll collect

Industry data shows: Invoices unpaid after 90 days have only a 73% chance of being collected. After 12 months, that drops to just 57%.

Before the Invoice: Set Yourself Up for Success

1. Establish Clear Payment Terms Upfront

Never start work without agreed payment terms. Include in every contract:

• Payment due date (Net 14, Net 30, etc.)
• Accepted payment methods
• Late payment penalties
• Early payment discounts (if offered)

2. Run Credit Checks on New Clients

For large accounts, a basic credit check can save you from problem customers. Look for:

• Business credit score
• Payment history with other vendors
• Years in business
• Public records (liens, judgments)

3. Require Deposits for Large Projects

Standard practice for projects over a certain threshold:

• 50% upfront, 50% on completion
• Or: 30% upfront, 30% at midpoint, 40% on completion

Invoicing Best Practices

4. Invoice Immediately

The clock on payment terms starts when you send the invoice—not when you finish the work. Invoice the same day you deliver.

5. Make Invoices Crystal Clear

Confusion delays payment. Every invoice should include:

• Clear description of products/services
• Quantity and unit prices
• Total amount due (prominently displayed)
• Due date (not just "Net 30"—put the actual date)
• Payment instructions
• Your contact information

6. Use Professional Invoice Templates

A professional-looking invoice signals a professional business that expects professional treatment. Xero's built-in templates are a good starting point.

7. Send to the Right Person

Invoices sent to a general email or wrong department get lost. Always confirm:

• Accounts payable contact name
• Correct email address
• Any purchase order requirements
• Preferred invoice format

Follow-Up Strategy

8. Implement a Systematic Follow-Up Schedule

Don't wing it—have a consistent process:

Day 1: Invoice sent with friendly note

Day 7 before due: Reminder that payment is coming due

Due date: Reminder that payment is now due

Day 7 overdue: Polite follow-up checking on status

Day 14 overdue: Firmer reminder, mention late fees

Day 30 overdue: Final notice before escalation

Day 45+ overdue: Phone call and potential collection action

9. Automate Where Possible

Set up automatic reminders in Xero for the early stages. Save your personal attention for seriously overdue accounts.

10. Always Be Professional

Even when frustrated, maintain professionalism. You want to preserve the relationship while still getting paid.

Getting Paid Faster

11. Offer Multiple Payment Methods

Remove all friction from payment:

• Credit/debit cards
• ACH/direct bank transfer
• PayPal/online payment services
• "Pay Now" buttons in email invoices

12. Consider Early Payment Discounts

A 2% discount for payment within 10 days (2/10 Net 30) costs you a little margin but can significantly accelerate cash flow.

13. Charge Late Fees

Clearly state late payment penalties in your terms. Even if you rarely enforce them, they create incentive to pay on time.

Key Metrics to Track

• Days Sales Outstanding (DSO): Average days to collect. Lower is better.
• Aging Breakdown: What percentage is current, 30 days, 60 days, 90+ days?
• Collection Effectiveness Index: How much of your AR do you actually collect?
• Bad Debt Ratio: Percentage of sales that become uncollectible