Who gave you permission to use my business as your bank?

There's something about overdue invoices that I find increasingly difficult to accept. It's the apparent willingness of some people to let another business carry their financial burden, without any thought for the person waiting to be paid.

You've delivered the product, completed the work or provided the service. You've met your obligations, issued the invoice and waited for payment within the agreed terms. Yet weeks, sometimes months later, you're still chasing money that should already be in your bank account.

Meanwhile, your own financial commitments haven't stopped. Wages still need to be paid, finance repayments are due, and the costs of running your business continue regardless of whether your customers have paid you.

You've effectively become someone else's interest-free bank, and you never agreed to it.

And the consequences can extend well beyond the original unpaid invoice.

When someone else's unpaid bill becomes your financial problem

Think about the farmer who's sold machinery or grain privately, the commercial fisher or fruit and vegetable grower who's supplied produce to an agent, or the contractor who's completed a job and is still waiting to be paid.

These businesses have already incurred the costs of producing, harvesting, catching, transporting or delivering what they've sold. Yet the money they're owed remains outstanding, sometimes well beyond the agreed payment terms.

I'm not talking about legitimate trading arrangements where payment terms have been agreed upfront. I'm talking about customers who take possession of goods or receive services and then decide for themselves when they'll pay.

And when that happens, the financial pressure shifts directly onto the business waiting for payment.

The real cost of deteriorating debtor days

Debtor days measure how long it takes a business to collect payment from its customers. When debtor days deteriorate, working capital becomes tied up in outstanding invoices rather than being available to fund operations.

Consider a business with $200,000 in overdue invoices. If those payments are delayed by another 30 days and the business needs to fund that shortfall through an overdraft at 9% interest, that's approximately $1,500 in additional interest.

If the delay pushes the business beyond its approved overdraft limit, the cost escalates. Excess borrowing typically attracts a higher interest rate, and often additional fees and closer scrutiny from the bank.

But the consequences can go much further.

Payments may be dishonoured, loan repayments missed and other accounts left outstanding. Depending on the circumstances, missed repayments or defaults can affect credit history, borrowing capacity and the business's relationship with its bank.

Think about that. A business owner's financial position and potentially their credit standing can be affected because someone else hasn't paid what they owe.

The impact goes beyond the bank account

There's also the time involved in chasing overdue accounts, following up on promises to pay, reconciling payments and continually reviewing cashflow forecasts because expected income hasn't arrived.

For small businesses, that time is often coming directly from the business owner, who is already juggling staff, customers, operational demands and their own financial commitments.

And then there's the mental load of it all.

Wondering whether the money will arrive in time to cover wages, whether you'll need to contact the bank or whether another payment will bounce is an unnecessary burden when you've already delivered what you were contracted to provide.

It's also frustrating to be put in the position of repeatedly asking someone to honour a financial commitment they've already made.

Your financial position shouldn't depend on someone else's willingness to pay

And if you're on the other side of this, the one holding someone else's invoice, this part is for you.

I understand cashflow pressures. Agriculture is seasonal, capital-intensive and exposed to circumstances outside our control. I work with farming businesses navigating these challenges every day.

But there is a significant difference between a business experiencing genuine financial difficulty and a customer who simply doesn't prioritise paying what they owe.

If you can't pay within the agreed terms, communicate early and make arrangements. Don't leave the other business chasing you, wondering when its money will arrive.

Imagine delivering your grain or selling your livestock, only to be told payment will arrive when the buyer has the cash available. You'd rightly question it. Yet some businesses are perfectly comfortable doing exactly that to others.

Because when you don't pay, you're making financial decisions on behalf of someone else's business.

You're deciding how long they should wait for their money, how much working capital they should have tied up and potentially how much additional interest they should pay.

And that isn't your decision to make.

Protecting your own business

If you're the one carrying overdue debtors, know how much working capital is tied up in them, follow up early and consistently, and be prepared to ask whether continuing to supply a customer who consistently pays late is still commercially sensible. We can't control when every customer pays. We can control how much of that risk we're prepared to carry.

A final thought

The next time you're tempted to leave an invoice unpaid because it's more convenient to keep the money in your own account, consider what that decision means for the person waiting on the other side.

They've already done their part, and they have a business to run, financial commitments to meet and people who rely on them.

Your decision not to pay should not put someone else's business at risk.

If you're carrying overdue debtors and wondering how you'll manage the cashflow consequences of someone else's unpaid invoices, that's a conversation worth having. Find out more about working together through AgCelerate, or book an introductory call.