Waiting on 30, 60 or 90-day invoices? Bridging the gap

A signed invoice for $24,000 feels like money in hand. In the bank, it is nothing at all. Your wages, rent and suppliers do not wait for the customer’s accounts payable team, and the longer the wait, the more of the business you are lending to someone else, interest-free.

The hidden loan to your customers

Say you spend $45,000 a month delivering work and invoice on 30-day terms, but customers actually pay in 55 days. At any moment you are carrying about two months’ costs while waiting for payment. Stretch to 90 days and you are carrying three. Few small businesses have that much slack.

Real days to pay	Approximate costs you are funding
14 days	About two weeks of outlay
30 days	About a month
60 days	About two months
90 days	About three months

None of this requires a bad customer. It is simply the normal terms of larger organisations, councils and developers.

Step 1: find your true number

Terms on the invoice and reality diverge. To see your real picture:

1. Run an aged debtors list in Xero, MYOB or your system.
2. For the last twenty or so paid invoices, note invoice date and date paid.
3. Average the gap, and separately for your five biggest customers.
4. Look for outliers: one customer might be stretching your whole average.

The biggest payers often hold the biggest chunk of your cash.

Step 2: shorten the wait

Funding should be the second step, not the first. Faster collection is free.

• Invoice on completion, not at month end.
• Take deposits or staged payments on larger jobs.
• Set clear terms on every quote.
• Follow up on a schedule from the day after the due date.
• Make payment easy, with a link or bank details on the invoice.

Our guide on getting invoices paid faster goes through each with scripts.

Waiting on big invoices and bills still falling due? Start the 60-second enquiry.

Step 3: bridge what remains

Some delay is structural. A government agency won’t pay in ten days because you ask nicely. For that residual wait, funding sized to the gap does the job.

A cash line

You draw when invoices go out, repay when they are paid, and the limit is free for the next cycle. Cost follows the days you use it. See the business cash line.

A working capital loan

A lump sum sized on the gap suits a one-off stretch, such as a large project where payments are months away. See the working capital loan.

Sized on turnover, not on individual invoices

Lending against your overall takings can be more flexible than being tied to specific invoices, and does not need your customers to be told. Ask which structure fits.

Count the cost against the benefit

Is it worth funding a slow payer? Compare:

• what the customer is worth in margin over a year
• what funding their delay costs you in dollars
• what it would cost to lose them

Often the customer is valuable enough that bridging is clearly worth it. Occasionally the numbers say the account should change terms or go elsewhere.

Watch for creeping delays

Late payment tends to worsen gradually. Review your debtors every month and flag any customer whose payments slip by more than a week. Early contact beats late arguments.

Use the right tools

The cash gap calculator lets you enter each expected payment on its realistic date, along with your bills, to see how deep and how long the gap will be.

Using your accounting software

Xero, MYOB and similar tools can reduce the invoice gap with almost no effort. Switch on automatic reminders before and after the due date, add online payment buttons to every invoice and use the aged receivables report to review slow accounts weekly. Some tools let you set default payment terms per customer, so a habitual late payer can have shorter terms without awkward conversations. Ten minutes of setup can pull days off your average collection time, and each day saved releases real cash. It is among the cheapest improvements available to a small business.

An illustrative example

Illustrative only. A Wellington signwriting firm invoices a council contractor $32,000 on 30-day terms, but experience says payment arrives around day 58. Wages and materials must be covered meanwhile. The owner draws $26,000 on a cash line the day the job is finished, repays it the day the contractor pays, and the same limit is available for the next job.

When to talk to us

If customers’ payment habits are limiting how much work you can take on, a conversation could free you. The enquiry takes about a minute, asking involves no credit check, and your details stay with one team. A real person reads it and rings you.

Realistic figures on invoice sizes, payment times and monthly costs let us suggest a bridge that clears itself.

Bridge my invoice gap →