Five tips for receiving customer payments faster

Key points

• The importance of immediate invoicing with clear payment terms
• Be careful about extending credit
• Make payments quicker and easier with PayID

Receiving what you’re owed from customers quickly can boost your cash reserves, open up your ability to take on new opportunities and provide a buffer to see you through harder times. The longer you wait for your customers to pay you for your products and services, the longer it can take you to pay your creditors, and the riskier your business could become. Below are five well-tested ways to help you get paid sooner. 

1. Invoice immediately

Why wait until the end of the month to invoice your customers? Encourage prompt payment by sending invoices immediately upon delivery of your goods or provision of your services. Make sure your payment terms are clear to avoid delays.

If your invoices are sent too late, they could:

• Make your business appear unconcerned about getting paid
• Cause your cash flow to grind to a halt

If you’re currently waiting until the end of each month to prepare your invoices, you could be unnecessarily adding up to four weeks to your cash flow cycle.

2. Incentivise early payments

You can also encourage prompt payment by offering incentives for customers to pay early.

Some businesses offer a small discount for paying within 10 days of an invoice date.

For example, a discount of around 2% for payment within 10 days could be an effective option that might not leave you too out of pocket.

Your customers are also more likely to pay attention to a specific date.

3. Always run checks before extending credit

Even the smallest businesses need to have credit policies in place that provide guidelines for determining which customers will be extended credit and on what terms.

Some businesses make the mistake of rushing through the credit check process when presented with a lucrative sale, but it could be the difference between getting paid and not being paid at all.

As a minimum, you should have systems set up where new customers are required to fill out a credit application and consent to a credit check.

Work with your lawyer or accountant to develop a form that includes your terms of trade.

4. Use shorter credit terms or remove credit as an option

Shortening your credit terms or removing the credit option altogether might be necessary to consider if your business is: 

• Facing ongoing customer credit issues
• Experiencing cash flow problems

You’ll need to balance your decision against the possibility that your prompt-paying customers could be disadvantaged. Offering credit can be a big draw card and removing the option altogether might cause your best customers to start looking elsewhere.

5. Make getting paid easier with PayID

Setting up PayID allows you to send your customers a ‘nickname’ for your account, rather than having to provide your full BSB and account number.^disclaimer

It’s easier than making a traditional payment, which means you and your customers can save time on admin – and you could get paid sooner.

PayID payments have the same level of security as payments between your existing bank accounts, but they can be made in as little as 60 seconds.

Find out more and watch a video about setting up PayID here.

Next steps

• Take more control of your business’s cash flow with our cash flow forecast template (xlsx 114kB)
• Download our cash flow improvement checklist (PDF 1.5MB)