Small business cashflow depends on prompt payment. We analyzed over 12 million invoices to discover some revelations to getting paid on time. We also asked the small business community for their tips & tricks.
See your best options for invoicing and payment terms.
Get insight from a community of accountants and business owners.
Read popular tips for getting paid on time and invoicing efficiently.
Take the quiz and prove you can bring in the Benjamins.
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Invoicing & payments for small businesses is no easy feat. Watch how others have walked the guantlet with their businesses.
If you think your payment terms have no impact on when people pay you,turns out it actually has a very real and direct effect on when you get paid.
Regardless of whether your payment terms are due immediatelyor due in 30 days, on average invoices are paid two weeks late.
If you’re aiming to get paid in thirty days, you should make your payment terms 13 days or less.
This chart represents over 12 million small business invoices raised globally between January 1, 2009 and September 1, 2012.
The data is intended to provide insight by analyzing an aggregated, non-identifiable set of invoicing data from Xero - it is not segmented by region, industry, revenue or season.
Average days payment overdue
Payment terms in days
Over 1,500 of our Xero community shared their experiences with invoicing & payments. Here’s a selection of their helpful suggestions.
“Getting invoices out on time when you are busy, following up on overdue invoices & splitting payments that don’t match invoice amounts across multiple invoices.”
“The most challenging part for us is getting our staff to write comprehensive narratives that enable our Finance Manager to invoice quickly and comprehensively.”
“Trying to figure out what work has been done and what needs to be invoiced, especially when there are a few people working on the each account.”
“Creating an invoice that does not go to the bottom of the pile, it’s important to make it stand out above other invoices.”
“Adding overdue fees work a treat - we often reverse the charges but at the very least it generates conversation - sometimes pretty passionate...”
“COMMUNICATION! I’ve found just sending overdue reminder after reminder doesn’t really get me anywhere. Taking a couple minutes out to call them to follow up a reminder sent has worked out for me 98% of the time.”
“Have short payment terms and enforce them. We use 7 days. We are serious about the work that we perform, so we can be serious about collecting payment.”
“Call early, call often. 2 days late get a statement, 1 week late gets a phone call.”
“One thing I wish I knew? I tracked time (was used to that) but was not so good at tracking all those incidentals which need to be on-charged. Also had to learn a lot about following up to actually get paid.”
“Some people never open their mail or their email, and a phone call is sometimes what they need to get them to do so!”
“That you need to have an administration fee built-in. Invoicing can take up to 10% of your time in follow ups a month and that then lags the rest of your administration duties.”
“A simple thing like getting the 'bill details' of your clients is essential. We've made the mistake many times of invoicing without fully knowing which entity will actually be paying the invoice.”
“A couple of months ago I was travelling on business in Europe. I did my monthly invoicing using mobile broadband from the train. Brilliant use of otherwise down time!”
“I'm spending the summer volunteering at a boys camp, and I can log in to tend to some of the billing items that I take care of without having to add that onto the shoulders of my technician.”
“It is vital to be able to send an invoice or quote from anywhere as we have staff in three different states who travel interstate for jobs constantly. The majority of invoicing is done from airport lounges.”
“Yes, in my experience, the closer the gap between providing the service and issuing the invoice, the more likely it is you'll get paid quickly as customers are still in the 'feeling delighted/grateful' zone...”
Getting paid and having a healthy cash flow is the lifeblood of every small business, but it’s not always as easy as sending an invoice at the end of the month.
You’ll be laughing straight to the bank with these top invoicing tips.
Getting this sorted upfront means that there is no confusion down the track. It also sets the clients expectations around payment before you start the work.
This saves time when it comes to creating the invoice and makes sure you don’t miss anything. It also means if things are going over budget you can let your client know, instead of sending them an expensive surprise at the end of the month.
List the details of the job in a way that makes sense to the client, any confusion could create a payment lag. It’s also good to personalize your invoice with your business logo - it helps carry on the professionalism of your work.
If you need to receive payment within 30 days, our data reveals that you will need to set your payment term 13 days or less. Keep in mind that on average, debtors pay invoices 2 weeks after the due date.
Make sure your invoice goes straight to the person who makes payment to avoid getting lost in someone elses inbox. If you’re unsure exactly who that is, give them a call - it pays to know the person paying the bills.
Send your invoice as soon as possible, the sooner a client receives an invoice the sooner they will make payment. It also means they will receive it when the value of your work is still fresh in their mind.
The squeaky wheel gets the oil. When things become overdue send reminders, monthly statements or make a phone call. It will help remind your client that you are serious about getting the invoice paid.
Having a process that helps streamline invoicing can reduce the amount of time you spend collecting your hard-earned money. Find out more about how Xero can help.
Think you now have what it takes to master invoicing & payments. Take the quiz and see if you can bring in the Benjamins.
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