Accounts Receivable Follow-Up

Finishing the job and getting paid for it are separate projects, and most small businesses only plan for the job. The result is a familiar pattern — invoices drift past due, the owner feels awkward about chasing, and the awkwardness compounds with every week of silence. By the time the conversation happens, it is harder than it ever needed to be.

Why invoices actually go unpaid

Genuine refusal to pay is rare. Far more often the invoice went to the wrong inbox, is missing a purchase order number, was addressed to the wrong entity, or the approver is on leave. Early, friendly follow-up exists to find the real reason quickly — and it protects the relationship rather than straining it, because problems get fixed while they are small.

A cadence that holds up

• Before the due date: a short note confirming the invoice was received and nothing is blocking it. This catches the "never got it" cases while there is still time.
• On the due date: an automatic reminder from Xero or MYOB. Keep it warm; it is a nudge, not an accusation.
• 7 days overdue: a personal email from a named human, asking if anything is holding payment up.
• 14 days overdue: a phone call. Phone calls resolve more overdue invoices than any volume of email, because they surface the real blocker in minutes.
• 21 days overdue and beyond: pause new work, send a statement, and decide deliberately — payment plan, formal demand, or debt collection. Drifting is the only wrong choice.

Run the aged receivables report weekly. It is the most useful cash flow report in the file, and it only helps if someone actually looks at it.

What we commonly see go wrong

• Reminders switched off entirely after a client complained, so nobody gets chased at all.
• The person who did the work doing the chasing — separation helps; "accounts" can be firm while the relationship stays warm.
• Continuing to deliver work to a client whose balance keeps growing, converting an overdue invoice into an existential debt.
• No deposits or progress billing on large jobs, so all the risk sits at the end.

A worked example

As an illustration: a design studio lets a friendly long-term client accumulate unpaid invoices across several months because "they always pay eventually". When the client's own cash dries up, the studio is the least protected creditor — no security, no retention of title, months of free credit already extended. A simple rule of pausing new work at a set overdue threshold would have capped the exposure early, and most clients respect a clear rule more than they respect silence.

When to get help

If overdue debtors are effectively funding your customers' businesses at the expense of your own, or you are unsure when a bad debt can be written off, it is worth a structured look at your terms, deposits and follow-up cadence rather than another round of awkward emails.

When can I write off a bad debt?

Generally when the debt has gone genuinely bad, you have taken reasonable steps to recover it, and it is formally written off in your accounts before 30th June of the income year you claim it in. If you account for GST on an accruals basis, a GST adjustment may also be available — worth confirming before lodging.

Can I charge interest or late fees on overdue invoices?

Only if your terms and conditions provide for it, agreed before the work was done. Many businesses find deposits and pause-work rules more effective than late fees.

Should payment reminders come from me or from "accounts"?

Sending reminders from an accounts email address, even in a very small business, keeps the money conversation separate from the working relationship — and makes the phone call easier when it is needed.