Dealing with late payments
TL;DR: Resources for AU and NZ small businesses on managing and preventing late payments. Strategies, templates, legal considerations, and where invoice finance solves the cashflow gap without chasing customers.
Late payments are frustrating — but they’re also common. Here’s a practical, step-by-step approach to handling them without damaging client relationships.
Step 1: Don’t assume the worst
Most late payments are the result of oversight, not deliberate non-payment. Before escalating, check: Did the client receive the invoice? Is there a dispute about the work? Is there an administrative delay (e.g. invoice needs to go through an approval process)?
Step 2: Send a polite reminder
A friendly email or phone call the day after payment was due resolves most overdue invoices. Keep the tone professional — assume the delay is administrative, not malicious.
Step 3: Escalate progressively
- Day 1 overdue: Polite email reminder
- Day 7 overdue: Phone call
- Day 14 overdue: Formal overdue notice in writing
- Day 30 overdue: Formal demand letter (consider legal advice)
- Day 45+ overdue: Debt collection or legal action if warranted
Protect yourself while you wait
Late payments can put your own finances under pressure. Invoice finance lets you access money from invoices that haven’t been paid yet — so a slow-paying client doesn’t become your problem. You can fund the invoice with FundTap and pursue the late payment at your own pace.
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