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Reducing the Risk of Non-Payment
Late-paying customers are a real problem as your business grows. Here’s how to protect your cash flow and collect more of what you’re owed.
How to Reduce Late Payments and Bad Debts in Your Business
As your business grows and you’re dealing with more customers, late payments become a bigger problem. It’s not a matter of if — it’s a matter of when.
Here are two things that make the biggest difference.
Charge an upfront deposit
For project-based work, invoicing 20–50% upfront is completely reasonable. Most clients will understand — and if you’ve been stung before, you can say so. It also means that by the time you’ve finished the work, the customer has already committed financially, which reduces the risk of disputes.
Build a follow-up process
This is the one most business owners don’t do consistently. Set aside time in your calendar each week specifically to review outstanding invoices and follow up. If it’s in your calendar, you’ll actually do it.
Xero has automated invoice reminders you can set up so the system does the chasing for you. It’s one of those small things that pays for itself quickly.
The businesses that get paid on time are the ones that have a process. It doesn’t need to be complicated — it just needs to be consistent.