Business Advice

Late payments: Why collecting your money is even more important now

- September 23, 2022 3 MIN READ

Late payments have always been a problem for small businesses, but right now they’re costing you dearly, writes small business mentor, Bronwyn Reid.

Until COVID-19 arrived, an entire generation of Australian business owners knew nothing but relatively benign business conditions.

Gen Z (and Millennials) had little experience of harsh economic conditions – until COVID came to visit. Yes, the GFC was a significant setback, but Australians managed to escape relatively unscathed.

Some were also affected by the resources industry downturn in 2012 – 2013 – including me. But on the whole, life in business had been reasonably fair sailing for Millennial and Gen Z owners.


They were also pretty inexperienced when it comes to inflation and high interest rates.

Then came COVID and a big shock to us all

Not surprisingly, most of these younger business owners are now worried about the cost of fuel and inflation.  Price increases are scary, and raise all sorts of business issues – do I increase my prices? If so, by how much? When do I do it? How do I do it?

All those questions are very, very important. Product and service pricing is something that is easy to let slip while you concentrate on rebuilding now the pandemic is subsiding. (I know! Been there, done that!)

But there’s another ‘pricing’ issue to be aware of – the ‘price’ of money. It’s not just inflation that has turned north, but interest rates as well.  That gives us a double-whammy:


  • Inflation

Inflation means that each dollar buys less than it did previously. Where apples were once $2 per kilo, $2 may now only buy one apple.

  • Rising interest rates

Most businesses have money borrowed – a business loan, a credit card, even a house loan. As interest rates rise, every dollar becomes more ‘expensive’.

Are late payments beyond our control? Maybe not …

Both inflation and rising interest rates are beyond the control of a small business owner. Inflation is influenced by government policies and international events. Interest rates are set by the Reserve Bank of Australia – in response to inflation (and other things).

So what can small business owners do to get through this rough patch? I have already mentioned raising your prices, and you most certainly should be all over that one.

But there is a second way to help yourself. Get your invoices out early, and don’t let your clients be late payers. The money is better off being in your pocket.

Every day that passes while you wait to send out your invoices or wait for your clients to pay, means those dollars are worth less and less. So, it stands to reason that you should be collecting late payments as soon as possible. If you keep waiting, that $2 I mentioned earlier may only buy you half an apple!

At the same time, the money you borrowed to run your business is costing more. Every interest rate rise means you must repay more to the bank (or whoever you borrowed from).

The upshot is a second double-whammy. Every dollar you have borrowed costs more, and you get less for it.

(For the economists amongst the readers, I know it’s more complex than that, but stay with me!)

The answer – not the complete answer but it will definitely help – is to:

  • 1. Get your invoices out early (earlier?)

Get your invoices out IMMEDIATELY – even if it means sending two or more invoices as a job progresses.

  • 2. Get your money in early

If you can, cultivate clients with short payment terms and avoid those with a record of paying late. Ensure you have all the invoice details correct to avoid delays. Follow up late payments the day after they are due, and don’t let up.

A change in business conditions is upon us, and we must all navigate it as best we can. Much is out of our individual control, but we can concentrate on getting the money we are owed into our bank accounts as fast as we possibly can.


Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on FacebookTwitter, Instagram, and LinkedIn.

Now read this:

How e-invoicing could help solve the late payments problem

KBB Sales and Marketing Workshop