A customer is paying late

You did the work, sent the invoice and planned around being paid on day 30. Day 30 has come and gone. Now it’s day 45, the customer’s accounts team “is processing it”, and your own bills are due on Friday. A late payer can put a perfectly healthy business into a cash squeeze in a matter of days.

Fast funding can bridge that gap. The trick is to bridge the gap, not the whole invoice, and to fix the pattern if it keeps happening.

Size the loan to the gap

The overdue invoice might be $80,000, but that’s rarely what you need to borrow. What you need is enough to get through until it’s paid:

What’s due before the customer pays	Example
Wages, PAYG and super	Next pay run
Rent	Due on the first
Key suppliers	Those who’ll stop supplying if not paid
BAS instalment	If it falls in the window
A buffer	A week or two in case the payment slips again

Add those up and you’ll often find the real gap is a fraction of the invoice. Borrowing less means paying less, and fast money costs more than slow money.

How fast it can move

Late-payment gaps suit a cash flow loan or a short unsecured loan. With online banking linked, ID ready and the overdue invoice to show, same-day funding is possible for smaller amounts once the file is complete. If you already have a line of credit, this is exactly what it’s for: draw what you need now, repay when the payment lands.

What to have ready

• The overdue invoices, with dates and amounts.
• The customer’s payment history: have they paid late before, and how late?
• Any written confirmation from the customer about when they’ll pay.
• Linked bank statements and ID for each director.
• A list of the bills you need to cover.

Chase the payment at the same time

Your repayment is the late payment, so keep chasing it. Polite, firm and regular contact with the customer’s accounts team, a copy of the invoice and terms, and a named person to follow up with all help. For larger debts, check your contract’s dispute and interest clauses. If a big business is the late payer, the Payment Times Reporting Regulator publishes how quickly large businesses pay small suppliers, which is useful context when you push for payment.

An illustrative example

A Perth electrical contractor is owed $86,000 by a builder on a completed stage, now 20 days overdue. Wages of $28,000 and a $9,000 wholesaler account are due within the week. The builder confirms in writing that payment will be made in about three weeks. The contractor takes a short cash flow loan of $40,000, covering wages, the wholesaler and a buffer, and repays it when the builder pays. The rest of the invoice lands as profit, not debt. Illustrative only.

When late payment is the norm

If every month brings another late payer, a series of short loans becomes expensive and starts to look like stacking. Better long-term fixes include:

• A line of credit sized to your typical gap, drawn and repaid as invoices land.
• Invoice finance, which advances a share of unpaid invoices and is repaid as customers pay.
• Shorter terms or deposits on new work, especially with customers who’ve paid late before.
• Progress billing on longer jobs, so you’re never waiting on one big invoice.
• Credit checks on new customers before extending terms.

Talking to your own creditors

While you wait, a quick call to your own suppliers or landlord can buy time too. Many will accept a short delay or a part-payment if you explain that a customer is late and show when the money is due. That can shrink the gap you need to fund, or remove it. Just make sure any arrangement is in writing and that you stick to it, because breaking a promise to a supplier mid-crunch costs more goodwill than the original delay.

Keep the ATO in mind as well. If a BAS falls due while you’re waiting to be paid, lodge it on time even if you can’t pay the full amount, and ask about a short payment arrangement. Lodging on time keeps your options open with lenders.

If the customer may not pay at all

If there’s a real risk the customer won’t pay, be careful about borrowing against the payment. Ask for advice early, look at your contract, and consider whether a smaller loan or a payment plan with your own creditors is safer. Small business dispute resolution services can help with larger amounts.

Bridge the gap, not the invoice

Tell us who owes you, how much, how late it is and what bills are due. Asking doesn’t touch your credit file, your details aren’t sent to a dozen lenders, and one real person reads it and calls you. Accurate numbers help us size the loan to the gap, not the whole invoice. Start your enquiry here.