Small businesses getting paid quicker, but still late

The latest Xero Small Business Insights (XSBI) data contained some welcome news for small business owners, with a reduction in average late payment times across all five countries where data is collected. This is obviously good news and a welcome boost for cash flow management, a critical issue for small businesses. 

Nevertheless, it is also a reminder that there is more work to be done. Invoices issued by small businesses are still, on average, being paid late which makes it more difficult to juggle finances and manage cash flow.

The latest XSBI late payment results

The December quarter data demonstrates a clear trend of getting paid “less late,” setting new benchmarks in several countries:

• Australia: an average of 6.6 days late, the second shortest quarterly result for the country (since records began in January 2017)
• United Kingdom: an average of 8.0 days late, the second shortest quarterly result for the country
• United States: an average of 7.8 days late, the shortest time in four years
• New Zealand: an average of 4.5 days late, a record low for this series
• Canada: an average of 9.7 days late, the shortest time since the June quarter 2024

Still more work to be done

While these near-record results are a testament to the efforts of small business owners and the growing awareness of the importance of prompt payments, a key takeaway remains: small businesses are still being paid late. This delay has a detrimental impact on cash flow management, which is one of the biggest challenges facing small business owners. The goal for all markets is to reach a late payment measure of 0, that is a world where small businesses are consistently paid on time.

What steps can you take to get paid quicker 

It’s vital for small business owners to stay focused on improving their payment results. Thankfully there are many ways you can increase the likelihood that your invoices get paid quicker than the average timeframe. 

Here are four easy steps you can take today to modernise your payment practices and help reduce late payment times in your business:  

• Use online payment options – Xero customers who use online invoice payments get paid up to twice as fast than those who don’t use online invoice payments
• Set up automatic invoice payment reminders – small businesses save 3 hours weekly with automated payment reminders in Xero
• Add a ‘pay now’ button to invoices – small businesses using this Xero feature are paid up to twice as fast
• Offering as many payment options as possible to your customers – in Xero, you can accept online payments by credit card, debit card or direct debit straight from your Xero invoices, so customers can pay the way they want and you can get paid faster

By making these simple adjustments, small business owners can build on the positive momentum of the December quarter and work toward a future where “on-time” payment of small businesses is the new normal.