Logiframe

Guide

Most late payments are decided before the invoice is sent.

A customer who pays late is rarely making a decision on the due date. The decision was made earlier: by terms nobody wrote down, an invoice that went out two weeks after the work, or credit that was extended without anyone checking what was already owed. Here are the fixes in the order they take effect, and how to set each one up in Xero or QuickBooks Online.

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Before the work

Set Terms Before the Work Starts

Terms that exist only in your head can’t be enforced, and most customers will read silence as flexibility.

Written terms of trade belong in your quote, your contract or your customer onboarding, so they are agreed before there is anything to argue about. At minimum they should say:

  • When payment is due. Name a number of days. “Net 30” is common because it is common, not because your cash flow needs it. If your costs land within two weeks, ask whether 14 days is reasonable for your industry.
  • What happens when it is late. Any late fee or interest, and how it is calculated. State rules on late fees and interest vary, so have your attorney check the wording once.
  • Any incentive for paying early. A small discount for payment within, say, 10 days can be cheaper than the cost of waiting. Work out what it costs you as an annual rate before you offer it.
  • How much credit a customer can run up. A limit agreed up front makes pausing new work a policy question rather than a personal one.

Know your industry norms. If competitors routinely take deposits and you don’t, you are financing your customers’ projects for free.

The cheapest fix

Invoice the Same Day

The clock on your payment terms starts when the invoice arrives, not when the work was done.

An invoice sent two weeks after the job turns Net 30 into Net 44. Invoicing on the day the job is finished or the goods are delivered is the single cheapest improvement most businesses can make, and it needs no negotiation with anyone.

  • Invoice from the field. Xero and QuickBooks Online both have mobile apps that let you raise and send an invoice before you leave the site.
  • Automate the regular ones. Retainers, subscriptions and fixed monthly fees should go out on schedule without anyone remembering. Xero calls these repeating invoices. QuickBooks Online calls them recurring transactions.
  • Turn quotes into invoices. Both platforms convert an accepted quote (an estimate, in QuickBooks) into an invoice, so the figures the customer agreed to are the figures they are billed.

Removing friction

Make Paying Easy

Every step between the invoice and the payment is a reason to put it off.

Customers pay faster when the invoice carries a way to pay it. Both platforms let you add online card and bank (ACH) payment to the invoice itself: QuickBooks Online through QuickBooks Payments, and Xero through connected payment services such as Stripe. The customer clicks, pays, and the payment is matched to the invoice.

Card fees are a real cost, so decide deliberately: absorb them, accept bank payments only above a certain amount, or price them into your rates. What you shouldn’t do is make the only option a check in the mail.

Longer jobs

Deposits and Progress Billing

For work that runs over weeks or months, waiting until the end to invoice means paying your own costs for the whole project.

Agree a payment schedule as part of the contract: a deposit on signing, then payments tied to milestones the customer can see. It does two things. Your cash comes in alongside your costs rather than after them. And if the customer runs into trouble halfway through, you are exposed for one stage, not the whole job.

Define the milestones clearly enough that there is nothing to dispute when you invoice them. “Framing complete and inspected” is a milestone. “Phase two” is not.

Both platforms can invoice a deposit or a stage of an agreed quote. QuickBooks Online has progress invoicing built in on its Plus and Advanced plans. In Xero, staged billing is usually run from the quote or through Xero Projects.

Follow-up

Reminders That Run Themselves

Nobody enjoys chasing, which is why it gets skipped in the busiest weeks, which is exactly when cash is tightest.

Xero and QuickBooks Online can both send invoice reminders automatically: a polite note a few days before the due date, another on the day, and firmer ones after. Set them up once, in your own name and tone, and they go out whether or not anyone has time that week.

Keep the reminders factual and attach the invoice each time. Most late payers are disorganised rather than unwilling, and a reminder that makes paying easy gets more results than one that sounds annoyed.

Bad debts

Credit Control

Bad debts are mostly the result of extending credit to a customer who was already behind.

  • Check before you extend credit. For a new business customer, a trade reference or a business credit report costs little compared with an unpaid invoice.
  • Look at the aging before you take the next order. The aged receivables report (A/R Aging in QuickBooks Online) shows what each customer owes and for how long. A customer with a balance in every column is a different conversation from one late invoice.
  • Never extend more credit than you could afford to lose. If one customer not paying would put payroll at risk, that customer’s limit is too high.
  • Chase the largest balances first. Work the aging report from the top. An hour spent on the biggest overdue account is worth more than a day on small ones.
  • Know when to hand it on. For a debt that won’t move, a collection agency or an attorney is often more effective than another reminder. Decide in advance at what age and amount you take that step.

In one place

The Checklist

Eight steps. Most take an afternoon to set up and then run without attention.

#StepDone when
1 Written terms of trade Due date, late fees, any early-payment incentive and credit limits are in every quote or contract.
2 Same-day invoicing Invoices go out the day work is finished or goods are delivered.
3 Regular invoices automated Retainers and subscriptions bill on schedule without anyone remembering.
4 Online payment on the invoice Customers can pay by card or ACH from the invoice itself.
5 Deposits and milestones Longer jobs have a deposit and a written payment schedule.
6 Automatic reminders A reminder sequence runs before and after every due date.
7 Credit checks and limits New customers are checked, and every customer has a limit.
8 Weekly aging review Someone reads the aged receivables report every week and acts on the top of it.

How Logiframe helps. Every bookkeeping package keeps your receivables recorded and gives you an aged receivables report each month. If you want the cycle run for you, our receivables add-on sends invoices on time, keeps reminder sequences going out under your name, sets up online payment options and applies cash to the right invoices, in Xero or QuickBooks Online. Calls to customers and negotiating terms stay with you, and we make sure you have the numbers to do it well. See what the receivables add-on includes.

Questions

Commonly Asked

What payment terms should a small business use?
The shortest terms that are normal in your industry. Net 30 is common, but if your costs fall due within two weeks, Net 14 or a deposit is often accepted without pushback. Whatever you choose, put it in writing before the work starts.
Do automatic invoice reminders annoy customers?
Rarely, if they are polite and factual. Most customers pay late because they are disorganised, and a reminder with a payment link attached makes it easy for them. You control the wording and timing in both Xero and QuickBooks Online.
Can I charge a late fee on an overdue invoice?
Usually, if it was in your agreed terms before the work began. State rules on late fees and interest differ, so have your attorney check the wording once and apply it consistently.
Should I offer a discount for early payment?
Only after you have worked out what it costs. A 2% discount for paying 20 days early is equivalent to a high annual interest rate. It can still be worth it if cash is tight, but it should be a decision, not a habit.
Does Logiframe chase customers for payment?
No. We set up and run the reminder sequences in your own name, keep receivables accurate and report the aging every month. The calls and the negotiations stay with you, because those relationships are yours.
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Next

Where to Go Next

Xero guide Accounts Receivable in Xero Reminders, payment options and cash application, set up in Xero. QuickBooks QuickBooks Monthly Bookkeeping How we keep receivables current in your QuickBooks file. Xero guide Cash Flow Management Seeing the cash position coming, not just the one that arrived. Service Bookkeeping Packages & Pricing Including the receivables add-on, with prices. Guide Month-End Close Checklist Why receivables have to tie before the month can close. Guide What Bookkeeping Services Cost What is included, and what is usually extra.

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