Need a robust payment follow up process to protect your business? Download my practical guide.
Late-paid invoices are now the #1 silent killer of Australian SMEs. Yet one of the many things that most people DON’T get taught when they start a small business is how to get paid without getting pushy.
Most SME operators wait politely to be paid, and only start to chase their outstanding invoices when they become overdue. They don’t have a process for managing payments proactively.
Late-paid invoices are killing small businesses (often slowly)
On top of the structural cash flow challenges of long industry credit terms – which can be anything from 30-90 days – dealing with late-paid invoices adds enormously to the work of running a successful SME in today’s volatile world.
CreditorWatch reports that 74 % of small businesses and 92 % of construction firms have overdue invoices on their books. On top of that, payment defaults are up 68 % year-on-year insidesmallbusiness.com.au. Xero’s 2024 data shows the average bill was paid 7–10 days late, a trend that got worse through FY 24-25 xero.comsmallbiztrends.com.
If your average debtor days sit above 30 – a metric which most accounting software tools will tell you – then you’re effectively acting as an interest-free bank for your customers.
How do you handle this?
The technical term for the business discipline for chasing overdue payments is called “Dunning”. Some definitions of Dunning are limited to dealing with overdue payments. However – for best results AND least relationship friction – the Dunning process is best started BEFORE big invoices become overdue.
A disciplined Dunning process reduces cash flow stressors and shortages in your business by:
- Cutting days-sales-outstanding (DSO)
- Creating more predictable cashflow to support wages, BAS, and growth
- Protecting relationships by removing ad-hoc “money chasing” calls
So what does a good SME Dunning Process look like?
I’ve written a white paper that details a step-by-step, Australia-specific playbook for a practical SME dunning process. It includes five ready-to-copy email templates, PLUS legal considerations, software options, and a real-world case study.
So, if you’re tired of giving your customers interest-free loans, then download my white paper The Dunning Process: A Practical White Paper for Australian SMEs Ready to Get Paid on Time
