GETTING PAID
What is slow payment costing you?
See how much cash is tied up in unpaid invoices, what that costs when you borrow to cover it, and what getting paid sooner is worth. Includes card fees and uncollected invoices.
01Your numbers
The starting numbers are an illustrative example, not industry benchmarks. Replace them with your own.
HOW IT WORKS
Late payment cost calculator
Every day an invoice sits unpaid, you are lending the customer money. Multiply what you invoice per day by the days it takes to get paid and you get the cash tied up in receivables. If you cover payroll and parts with a credit line or card while you wait, that cash has a real interest cost.
- 01Enter what you invoice in a typical month.
- 02Enter how many days customers take to pay on average, and the number you are aiming for.
- 03Enter the rate on the credit line or card you use when cash runs short.
- 04Add the share paid by card with your processing fee, and the share you never collect.
A WORKED EXAMPLE
A late payment example
An illustrative shop invoices $60,000 a month and waits 38 days on average, so $76,000 is tied up at any time. Borrowing that at 12% costs $9,120 a year. Getting paid in 7 days instead frees $62,000 of cash and saves $7,440 a year. Card payments on 60% of sales at 2.9% cost $12,528 a year, and a 1.5% share never collected costs $10,800.
Questions, answered.
How do I find my average days to pay?
Take what customers owe you today, divide by what you invoiced in the last 90 days, and multiply by 90. Your accounting software may call it days sales outstanding (DSO).
I don't borrow. Does slow payment still cost me?
Yes, even if no interest shows up. Cash tied up in invoices cannot pay for a new truck, a bigger job or a slow month. Enter 0 as the rate to see only the cash tied up.
Should I stop taking cards to avoid the fees?
Not necessarily. Customers often pay faster by card, and sooner payment can be worth more than the fee. Compare the card fees here with the financing saved by getting paid sooner. Check your state's rules before adding a surcharge.
What gets customers to pay sooner?
Invoice the same day the work is finished, include a pay link, take a deposit on larger jobs, and follow up on a set schedule. Most late payments are forgotten invoices rather than refusals.
WHEN THE JOB MOVES FORWARD
Keep your customers, work, and follow-up together.
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