Chasing invoices by hand, and what it does to cash flow

How long does it take to get an unpaid invoice paid?

Ask your accounting package for the average number of days between the invoice date and the payment landing in your bank. That figure is the honest answer, and it is usually worse than the number in your head. Many owners measure from the date they sent the invoice, which flatters the result by however long the postal or courier leg took.

If you cannot get a figure easily, calculate it yourself. Take every invoice still unpaid from the last quarter, and for each one work out the days between the due date and today, or between the due date and the date it was actually paid. Then split them into four buckets: not yet due, one to seven days late, eight to thirty days late, and more than thirty days late.

That distribution tells you far more than an average. If most of your money is only slightly late, the problem is a reminder that never arrived. If a large share is more than thirty days late, reminders are not the issue and something else is — usually a dispute, a missing purchase order, or a customer who is waiting on somebody else to approve the payment.

Why do customers pay late when they are happy to pay?

Because paying an invoice is a task, not a favour. It sits in a queue behind the customer's own suppliers, it needs an approval from someone who has never heard of your business, and it requires a human being to make a small decision about releasing money. Nothing about that is a judgement about you.

The usual reasons, in rough order of how often they turn up:

• The invoice arrived by email and was never seen by anyone who can pay it.
• The purchase order number is missing, so it goes into a queue for someone to query.
• The customer's own month-end closed before the invoice arrived.
• Nobody at their end knows who to ask about it.
• It was genuinely overlooked, and nobody was going to remember to check.

None of these are fixed by being more persuasive. They are fixed by making the invoice easy to find, easy to approve and easy to pay, and by nudging at intervals that are predictable rather than driven by whether the owner remembers.

What does manual invoice chasing actually cost?

The typing and sending is the small part. The expensive part is what happens while the money is late.

Late payment means you are financing your customer's business from your own float. If an invoice you expected in ten days arrives in thirty, you cover the gap from your own working capital, and if several land together you may end up paying your own suppliers late to make good the shortfall. That is the real cost, and it is invisible on the income statement.

There is also a running cost in the chasing itself. Count what it actually takes:

cost of manual chasing = (invoices chased per month) x (minutes per invoice) x (loaded hourly cost)

Then add the second measurement, which is the one that matters:

cost of delay = (total value of invoices paid late per month) x (your cost of funding working capital)

Use your own funding cost. If you do not know it, the overdraft or credit card rate you actually pay, expressed as a monthly percentage, is a reasonable starting point for the calculation — but it is still a number only you can supply, so treat it as an estimate and say so internally.

A third cost is reputational and only shows up later. A supplier who waits three months for payment starts managing their own cash flow around you, and stops the discount or the priority you had.

Chasing is not a favour you do for a customer. It is the last step of getting paid for work you have already completed.

What should a chasing schedule look like?

Build it around the terms actually printed on your invoice, and remember that the clock starts when the customer receives it, not when you send it. Then attach a fixed action to every stage.

Two things make this work. First, the tone has to be set once, in advance, so nobody is deciding in a bad mood at the end of a long day. Second, a reminder is not a negotiation — if the customer disputes it, the dispute moves to its own thread and the payment thread carries on for the undisputed amount.

What should the reminder actually say?

Short, specific, and impossible to misunderstand. Include the invoice number, the amount, the due date, and one clear action. Do not apologise for asking, and do not write an essay.

Hi Thandi

Invoice INV-2091 for R 8 450.00 was due on 12 May and has not come through yet.

Payment details are below, or you can use this link: [link]

If it is already on its way, ignore this. If something is holding it up, tell me what you need from me and I will sort it out today.

Thanks

Note what that message does not do. It does not explain how hard the customer is working. It does not threaten. It does not mention a discount for paying now. It gives one action and offers to remove a blocker, which is what actually gets a reply.

What can be automated first?

Start at the top of the schedule, not the bottom. The friendly day-one reminder is the one you send most often, the one nobody enjoys writing, and the one where being three days late costs you almost nothing. Automate that, measure the average payment date, and only then decide whether the firmer stages need a human.

The companion checklist walks through measuring your current payment pattern, and the templates include a chasing schedule with the actual message text for every stage, an escalation ladder, and a tracker layout for the invoice status of every account.

Want a second opinion on your chasing schedule and which part of it to automate first? Book a free strategy session with Agentcy.