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6 ways to use invoice payment terms to get paid faster

For small businesses, the timely payment of invoices is critical for maintaining stable cashflow, but often businesses have to wait past the payment date to receive their dues.

Sometimes late payments are unavoidable, but they can also be delayed because invoice terms are unclear or invoices didn’t go out on time. In this guide, we’ll take a look at standard payment terms, best practices for invoicing, and what to do when payments are delinquent.

What are payment terms?

Payment terms outline how and when your customers will pay you. These terms will vary depending on the type of business you operate, but generally, payment terms will be either outlined in your service agreement or included on your invoices.

Service agreement terms:

  • Billing cycle – your billing cycle is the interval between invoices (usually 20 to 45 days). A service agreement should specify not only the billing cycle but also when you expect payment (upon receipt of the invoice, within 30 days and so on)

  • Payment-related fees – if you charge a fee for credit card payments, explain that in your service agreement, as well as when that fee may increase (such as quarterly or annually)

  • Accepted currencies – specify which currencies you accept (AUD, NZD or USD, for example)

  • Credit terms (if offered) – if you offer credit, explain the terms (such as 21 days to pay)

  • Late payment policies – clearly state what your fees are for late payments, and when a payment is considered “late”

  • Debt collection policies – define how you attempt to collect overdue debts. It’s advisable to have a lawyer review your debt collection policy for compliance with Australian Competition & Consumer Commission regulations.

Invoice payment terms:

  • Terms of sale – the language that describes the basics of any sale, such as the product or service, the purchase price, delivery method and fees, the amount paid/payment due and applicable taxes and fees

  • Due date – make sure the payment due date is prominently displayed on your invoices

  • Accepted payment methods – include all acceptable payment methods (credit card, BPAY, bank transfer, PayPal or payment gateways, for example) on your invoices

  • Contact information – don’t forget to include a contact phone number and email for whoever manages your accounting or invoicing.

Why are payment terms so important for businesses?

Many small business owners cite late payments as the top cause of cashflow problems. Many small businesses also report concerns about cashflow and a lack of awareness about how much money they receive in payments each month.

Establishing clear payment terms on invoices can help small businesses project and manage cashflow, as well as manage customer expectations. Detailed invoices reduce the risk of misunderstandings between businesses and customers.

What are the best payment terms?

The Business Council of Australia’s supplier payment code recommends that small business suppliers be paid within 30 days of receiving an invoice.

Today, you may find businesses with payment terms as brief as 7 days, while a few may still be found offering 90 and even 120 days.

The fact is, with most invoices now being delivered electronically, the majority of businesses won’t see any reason to offer payment terms longer than 30 days. But you’ll want to settle on a number that works for you and your customers.

How can businesses use payment terms?

The right payment terms can help reduce customer inquiries as well as administrative tasks. These are just a few ways businesses can use payment terms to improve their processes, as detailed below.

Instalment agreements

Some businesses offer instalment agreements, which might be unique to each customer. Payment terms can define these agreements — such as monthly instalments, an agreed amount paid upfront or a balloon payment that comes due at the end of the agreement.


Subscriptions typically require payments upfront for a certain time period, such as a specific dollar amount at the start of each month or quarter.

Some subscriptions may have introductory periods, after which subscription costs increase. These details can be explained in payment terms, so customers can anticipate when payments are due or when rates might increase.

Early payments

If you want to encourage early payments, offer an incentive — usually a discount of a certain percentage.

Your payment terms can define what “early” means in this instance (a week in advance of the due date, for example).

6 ways to get invoices paid faster

1. Discuss payment terms in advance

Clearly communicate your payment terms before rendering services or sending the first invoice. This will help align both parties and sets clear expectations before work begins.

2. Ensure timely delivery

Late payments aren’t always the fault of the customer. If you don’t have a process in place for generating and sending invoices immediately for a completed order, you may end up waiting longer than necessary for payment. Look for a solution that automatically generates and sends invoices, to remove the opportunity for errors and delays.

3. Expand payment options

Paper cheques are fast becoming obsolete, and while they may be preferred when B2B customers are making a large purchase, many customers prefer other methods. Let customers choose from several convenient payment options, such as BPAY or credit card.

4. Enable direct payments

People get busy – after that, that’s business. Rather than making customers sign into a different platform to process payment, use an invoicing solution such as MYOB to add a simple “Pay Now” button to all outgoing invoices. Customers can pay right for your products or services without ever leaving the invoice.

5. Automate past-due notices

If you’re already using a platform that generates invoices automatically, it should also be able to track the payment of invoices and send past-due notices when necessary.

Removing the human element from chasing down payments is a good way to preserve the business-client relationship.

6. Charge “overdue” fees

If a client chooses to ignore the payment terms stated on an invoice, you're entitled to charge additional fees in the form of interest. Often, a client will respond quickly after the enforcement of the overdue payment terms. If it's a first-time offence, you may decide to revert the fees and use it as a warning.

Additional invoice payment terms

1% 10 Net 30: A 1% discount if payment is received within 10 days; otherwise, payment is due within 30 days. (This may also be displayed as “1/10 Net 30”)

1MD: Monthly credit for a full month’s supply

ABN: Australian Business Number

CIA: Cash in advance

COD: Cash on delivery

CND: Cash next delivery

EOM: End of month

GST: Goods and Services Tax

Net 7: Payment is due 7 days after the invoice date. Other common terms using this format include Net 10, Net 30, Net 60 and Net 90

PIA: Payment in advance/cash in advance

How can software simplify invoicing?

The manual creation and processing of invoices presents multiple opportunities for delays and errors. A better approach is an automated invoicing system that calculates taxes, sends invoices and collects and reconciles payments.

With MYOB’s invoicing capabilities, you don’t have to worry about creating and sending invoices. Once you’ve added a customer to our system, we’ll handle the rest — invoicing, reconciliation and reminders for customers whose payments are past due.

Our one-click “Pay Now” option lets customers pay invoices immediately upon receipt, via our secure PCI DSS compliant payments gateway. We also allow you to customise your invoices with your logo and branding.

We help businesses of all sizes in Australia and New Zealand get timely payments, remain compliant with regulations and uphold the highest standards for customer service. Find out how much easier invoicing can be with MYOB. Start your FREE trial today!

Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.

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