How do I get customers to pay faster?

It’s one of the age-old questions. You’ve done the work and are now waiting for payment. For UK small businesses, that wait is longer than most would like with Xero’s Small Business Insights placing the current timeframe between invoicing and payment as 22.9 days on average.

This delay can feel like a long time when you have your own costs to cover. The good news is that some of the delay is within your control. Small changes to how you invoice, how customers can pay and how you follow up can take days or even weeks off the time it takes for money to land in your bank account.

This may sound obvious, but you’d be surprised how often people don’t invoice straight away. The payment clock can’t start until your customer has the invoice and every day you wait to send it is an extra day added to your payment time.

To invoice quickly:

We recommend invoicing within 1-2 days if not immediately, while your work is still fresh in the customer’s mind.

Offer a few options so that customers can pay in a way that suits them:

The easier you make it for clients to pay, the better. It’s also worth weighing up the payment processing fees against the time you’d otherwise spend waiting and chasing payment. While it might cost you a fee to provide certain methods, it can save you time in the long run that would be better spent on revenue-generating activities.

For large or long-running projects, a deposit upfront or progress payments along the way can keep cash coming in and reduce the risk of a big unpaid bill at the end.

For this kind of payment structure, make sure the expectations are laid out in any quote and engagement terms so your clients are aware of when payments will be due.

If you have quite long payment terms, many customers will take that time (or longer) to pay. Shortening your terms to 7 or 14 days sets a quicker expectation from the beginning.

This might not work for everyone so check what’s standard in your industry before making any drastic change to your default timeframes. If you do decide to go ahead with the change, make sure you give existing clients a heads-up if you plan to do a blanket change across everyone and not only to new customers.

Life gets busy and sometimes a friendly nudge is all it takes to get your invoice paid. The majority of late payments come down to forgotten invoices rather than someone not wanting to pay.

You can set up automatic reminder emails in your accounting software, both before the due date and at set intervals once it's overdue. This is quick to turn on and means you don’t have to manually chase every invoice.

If an invoice is overdue in a big way, make a quick call. Phone calls are much harder to ignore than an email and can surface any issues that might be holding up the payment. It can also be the difference between an invoice eventually being paid and one that you end up having to write off.

Late fees can be a great deterrent. Whether you actually choose to apply them or not, simply mentioning them in your terms and on your invoices can be enough to encourage timely payment. If you do apply them, make sure it’s consistent so that customers know you’re not messing around and are taking your invoicing and payment process seriously.

Faster payments can be a game-changer for how your business is run both financially and operationally.

Steady cashflow means you can pay your own bills on time and keep a good track record with your suppliers. It also removes some of the stress if you know that money is coming in when you expect it to rather than constantly worrying about your bank balance and whether you’ll have enough cash at any given point in time.

Timely payments can also mean less unproductive time spent chasing. When you’re not constantly managing cash flow gaps or the admin of following up with customers, you can put your time and effort into your business goals or more useful tasks.

You don’t need to overhaul your business to speed up payments. Start with one or two of the suggestions above and build from there. Each change might only bring payments forward by a few days, but together they can make a real difference to your cashflow.