Late payments in New Zealand tie up funds in the small business economy, limiting growth and making it harder for new businesses to thrive. Xero research found that late payments cost Kiwi small businesses more than $800 million. In this article, we explore 7 actionable strategies to help NZ businesses improve their cash flow management and get paid faster.

1Invoice immediately to speed up payments

One of the biggest reasons for late payments is delayed invoicing. If invoices aren’t sent promptly, clients may deprioritise them, leading to cash flow gaps.

Solution: Send invoices immediately after delivering goods or services. Using an automated invoicing system can help ensure invoices go out on time.

Example: Lisa, who runs a small marketing agency, used to send invoices at the end of the month. By the time her clients received them, they had either forgotten the exact service provided or prioritised other bills while waiting for cash to come in. To avoid these issues, she now invoices as soon as work is delivered, which helps her managing cash flow.

2Adjust invoice timing to match your business model

Many small businesses send invoices at the end of the month, but aligning billing cycles with work schedules can help improve cash flow.

Solution: Invoice weekly, fortnightly, or at key project milestones instead of waiting for month-end.

Example: Sam, a landscape designer, used to invoice after completing entire projects, leading to long periods without payment. Now, he bills fortnightly for ongoing work and requests upfront deposits for larger projects. This has stabilised his cash flow and reduced financial stress.

3Shorten payment terms and consider cash flow loans

Many businesses still use 30-day payment terms, but this can create cash flow challenges, especially when customers delay payments.

Solution: Where possible, reduce payment terms to 7 or 14 days. Some clients have set payment cycles, but others may be open to negotiating shorter terms if you have an established relationship. If reducing payment terms isn’t an option, consider cash flow loans for small businesses to bridge the gap while waiting for customer payments.

Example: Mia, a small business owner in the retail supply chain, struggled with late payments from bulk buyers, which often left her short on cash. To improve her cash flow, she negotiated shorter payment terms, reducing them from 30 days to 14 days with key customers. For clients who couldn’t adjust their payment schedules, she used a cash flow loan to cover expenses while waiting for payments.

4Ensure invoices are accurate and easy to process

Invoices can be delayed because the invoice isn’t lodged correctly, sent to the right people, or doesn’t meet the customer’s requirements.

Solution: Make sure that invoices are easy to understand, error-free, and include:

  • Due dates
  • Payment options
  • Reference numbers (e.g. PO or quote)
  • NZBN (New Zealand Business Number)

Send your invoices to the correct person responsible for payments and confirm any specific invoicing requirements clients may have.

Example: Aaron, a software consultant, discovered that a major client hadn’t processed a $6,000 invoice because it was missing a purchase order number. After fixing this, his invoices were paid on time, filling in a gap in his monthly revenue.

5Automate invoicing and payment reminders

Small business owners with a large volume of repetitive tasks may struggle to make time for admin and invoicing. In these situations, billing often slips under the radar, resulting in missed income.

Solution: Use cloud-based accounting software to automate invoicing and send automatic reminders before and after payment due dates. Before sending, review the system’s templates and adjust them to fit your tone and terms.

Example: As the owner of a cleaning business John cleans multiple houses every day but doesn’t always have time to issue invoices between jobs. He decides to use an invoicing platform to set up automatic billing to save time.

6Make it easier for customers to pay

Customers tend to have varying needs and comfort levels with different payment options. Receiving the funds on time often outweighs the transaction fees.

Solution: Make it easier for customers to pay by providing them with the options they prefer, whether it’s by credit card, bank transfer, or PayPal.

Example: Adam the mobile physiotherapist only issues invoices with his bank details available for payment to avoid merchant fees, but finds some clients take longer to pay because they may not have the available funds. He decides to switch to an invoicing platform which offers credit card payments, allowing his customers to pay him faster.

7Regularly track and follow up on overdue invoices

Never ignore overdue invoices as this could worsen your cash flow. Business owners should keep a close eye on their incomings and outgoings to keep things running smoothly.

Solution: Review outstanding invoices weekly and contact customers early if payments are overdue. If needed, consider outsourcing to specialists to recover outstanding debt.

Example: Zara, who owns a catering business, used to wait for clients to pay without following up. By implementing weekly invoice tracking and early follow-ups, she recovered $50,000 in overdue payments over six months, improving her cash flow.

Download your ‘7 Ways to Get Paid Faster’ checklist.