A client is ignoring invoice payment deadlines. Are we doormats?

Dear Aunty B,


We’re a small consultancy based in the US that started up earlier this year. We give our clients 15 days in which to pay their invoices, to help our cashflows stay healthy.


Luckily, we haven’t had anyone skip out on us yet when it comes to invoice payments, and our clients know that on-time payments mean we remain around to offer them our expert skills.


However, there is one client who (despite gentle reminders) seems to simply ignore the deadline and pay on what seems to be a monthly cycle. On the one hand we’re thankful this client is actually paying its invoices, but on the other hand we don’t want to seem like doormats.


Could allowing a client to pay in its own time be the thin end of the not-paying-at-all wedge? How lenient is too lenient? And do we risk losing a fairly good customer if we start sending crankier reminders, if that’s the way to go?


(Aussie expat) doormat candidate,
Columbus, Ohio




Dear Aussie expat doormat,


Are you kidding? Can I tell you how delighted many Australian companies would be to even state 15 days on their invoices and then to actually get paid within 15 days?


In fact that has taken over as the number one fantasy of Australian business owners, pushing other popular fantasies such as “the sale offer from nowhere for a shit load of money” and “six month sabattical” well into the background.


Doormat, you have obviously forgotten how things work in the fair land of Oz. This is what we wrote a few months ago in a SmartCompany cashflow guide:


Set your credit terms carefully. The need to extend credit to customers is a fact of life for most businesses, but it is important to set clear limits. Carefully research the standard credit period for your industry and make an honest assessment about the consequences of shortening your credit terms. Reducing your payment period from 90 to 60 days might lose you one customer, but if the other 99 will pay more quickly it could be worth it.


Yep. That’s right. In Australia it takes on average 65 days to get paid from date of invoice. And many clients will tell you they get the money well after that. If you deal with some media buyers, you might actually get the money six months after you start running an advertising campaign!


You see, in Australia, small businesses are actually banks and tax collectors.

So Doormat, give thanks for prompt payment. And don’t catastrophise. One client who pays on a monthly cycle is to still be treasured and certainly does not deserve cranky emails.


Good luck with your business, and here are a few more cashflow tips.


Your Aunty B.


“Bills Brother” writes: You provide valuable insights. Your correspondent “doormat candidate” I think is absolutely reasonable. Two-week terms are not unreasonable if you consider the following:

1. Along with many companies, his payroll probably runs on a fortnightly cycle. Matching the inflow and outflow of cash is the ultimate goal for a sound business.

2. Modern financial systems, be it MYOB or SAP, have the capability to generate payments, whether EFT or cheque, on a routine cycle. Processing of transactions takes a short time. All it needs is the willingness for the user to adopt a reasonable workflow which generates the processing and regular payments. The reason that it “requires 30 days to process an invoice for payment, because it is such a difficult & tedious manual task” no longer washes. Any self respecting business will run its administration such that their financial data is up to date. If not – reconsider the risk as to whether you should do business with them.

3. Many customers have learnt from the large retailers – they make more money on the differential of terms they get from their supplier (60 days plus) compared to cash from their customers than they do on the margin of their products. That, in my view, is an abuse of power. You can choose whether to be part of that business model, or not.

4. Customers rightly expect a prompt response to requests for services – within hours if not minutes.

5. Prompt payment forces any delivery issues (eg unsatisfactory work) to be raised and resolved early.

6. It is therefore not unreasonable to ask someone to do what they agreed to do. There are no physical impediments, only a willingness to do what you said you would do : pay on time. Payment terms are usually discussed or revealed early in the negotiations. So we have an agreement in place: the supplier will deliver, and the customer will pay. Nothing hard about that. The supplier has delivered, so the customer now needs to fulfil his/her part of the bargain.


In my experience, customers will give you more respect if you do not let them treat you like a doormat. If they are unwilling or unable to meet their part of the bargain, use your ultimate trump card : for your sanity and long term viability you have every right to choose your customers, in the same way that your customer decide to choose you as a supplier, or not. Never more so than in today’s environment. The cost and effort of chasing outstanding debts must be carefully evaluated when assessing whether to keep a customer or not.


Do not be a doormat, have courage!

Aunty B - Your problems answered by SmartCompany's business bitch

What are you waiting for? Email your questions, problems and issues to[email protected] right now


Notify of
Inline Feedbacks
View all comments