The average Australian SME waits 37 days to get paid after issuing an invoice — and for many, it's much longer. Every day an invoice goes unpaid is a day you're essentially providing an interest-free loan to your customer. Here's how to tighten your AR and get cash in the door faster.
1. Invoice Immediately
The #1 rule: invoice on the same day you deliver the service or product. Every day you delay sending the invoice adds a day to your payment cycle. Set up Xero on your phone and send invoices before you leave the job site or finish the meeting.
2. Make It Easy to Pay
- Online payment links: Enable Stripe or GoCardless in Xero so customers can pay with one click from the invoice email. Businesses that add online payments get paid 2x faster on average.
- PayID: Include your PayID details on the invoice for instant bank transfers.
- Multiple options: Some clients prefer credit card, others direct debit, others BPAY. Offer all options.
3. Shorten Your Payment Terms
| Terms | When to Use |
|---|---|
| Due on receipt | Retail, small one-off jobs, new clients |
| 7 days | Most service businesses, trades |
| 14 days | Established B2B relationships |
| 30 days | Only when the client requires it (negotiate if possible) |
Don't default to "30 days" because everyone else does. Start with 7 days and only extend for clients who request it.
4. Automate Follow-Ups
Set up 3 automated invoice reminders in Xero:
- 1 day before due: "Friendly reminder — your invoice is due tomorrow."
- 1 day overdue: "Your invoice is now overdue. Please arrange payment."
- 7 days overdue: "Second reminder. Please pay immediately to avoid further action."
After 14 days overdue, switch to a personal phone call. After 30 days, send a formal demand letter.
5. Deposits and Progress Payments
- Request deposits: 30–50% upfront for large projects. This reduces your risk and improves cash flow.
- Progress billing: For long-term projects, invoice at milestones (e.g., 30% at start, 40% at midpoint, 30% on completion).
- Retainers: For ongoing services, charge a monthly retainer paid in advance. Set up as a repeating invoice in Xero.
6. Monitor Your Debtor Days
Track your average debtor days monthly: (Accounts Receivable ÷ Annual Revenue) × 365. Target:
- Under 14 days: Excellent — your AR management is strong.
- 14–30 days: Acceptable for most B2B businesses.
- Over 30 days: Action needed — review payment terms, follow-up processes, and client mix.
Key Takeaways
- Invoice on the same day as service delivery — every delay adds to your payment cycle.
- Add online payment links (Stripe/GoCardless) to get paid 2x faster.
- Start with 7-day terms, not 30. Only extend when clients require it.
- Automate 3 reminder emails in Xero; follow up by phone after 14 days.
- Request deposits and use progress billing for large projects.