How do I reduce bad debt and write-offs in a small business?

Make payment setup a condition of starting work, not an afterthought. Apex Tuition moved every customer to direct debit as the default, automated follow-ups the moment a job was completed, and put overdue accounts on a dashboard with alerts rather than discovering them at month end. Making overdue payments a tracked KPI for whoever owns finance is what keeps it from slipping. They cut write-offs from around 5 percent of revenue to under 0.5 percent.

What is direct debit and why make it the default?

Direct debit lets you automatically draw an agreed amount from a customer's bank account or card on a set schedule, so payment does not depend on the customer remembering to pay. Making it the default, rather than bank transfer, means money is far more likely to arrive before your own costs (like wages) go out, which protects cash flow.

How quickly should a small business follow up on overdue invoices?

As soon as the work is done and the invoice is due, not at month end. The longer an amount sits unpaid, the harder it is to recover, especially once you have already paid the staff or suppliers tied to that job. Automated reminders that start the moment a job is completed, plus alerts on overdue accounts, turn collection into a system rather than a chase.

Small Business Spotlight: How Apex Tuition Cut Write-Offs From 5% to Under 0.5%

Published October 2026By True Tally Bookkeeping5 min read

A small business owner reviewing cash flow and overdue invoices

Welcome to the first Small Business Spotlight. Every fortnight we feature a real Australian small business and the money lesson behind their growth, in the owner's own words, with our take on how any business can use it. First up: Max, founder of Apex Tuition Australia, who has been running the business since 2018, on the unglamorous thing that quietly decides whether a growing business survives: getting paid.

Meet Apex Tuition

Apex Tuition Australia connects students with tutors across the country. On paper the cash cycle is sound: families are billed a week after each session, and tutors are paid fortnightly, so customer money should land before wages go out. In practice, as Max explains, the model only works if the collection side is tight. Here is his story, in his words.

The challenge, in Max's words

On paper, we have a good cash cycle. Families are billed a week after each session, and we pay tutors fortnightly, so customer money should arrive before wages go out. The problem was families who started lessons without payment set up. By the time we chased them, the tutor had already been paid, and recovering the money weeks later was slow and often unsuccessful. At times up to 10% of a month's revenue was outstanding, and in our early years we wrote off around 5% of revenue.

The turning point

We re-built our cash collection process. Direct debit became standard for every family where before everyone was on direct bank transfers. We added automated follow-up sequences that start as soon as a session is completed, and dashboards and alerts that flag overdue accounts straight away rather than at month end. We made this a priority and made the key KPIs for our Finance person around overdue payments.

The outcome

Write-offs have fallen from around 5% of revenue to under 0.5%. Knowing that we have a system that works much better and will eventually collect all the money we are owed is a huge weight off my back. This is definitely not a solved problem either. We have grown significantly from the days where we did not use direct debit. At any given time we do have too much outstanding invoices that usually get closed near the end of terms. We definitely need to be doing a better job of getting this money into our account within our payment terms (7 days).

The bookkeeper's takeaway

What Max did is a template any service business can copy, and most should. Four moves, in order of impact:

Make payment setup a condition of starting, not a follow-up. The real leak was families starting lessons with no payment method on file. Collect the direct debit or card authority before the first session, and the problem mostly disappears at the source.
Default to direct debit. Bank transfer relies on the customer remembering. Direct debit draws the agreed amount automatically, so your money arrives before your costs go out. That single change does more for cash flow than any amount of chasing.
Automate follow-up from the moment the job is done. Reminders that fire the instant a session or job is completed, not at month end, catch problems while they are small and recoverable.
Put overdue on a dashboard and make it someone's KPI. What gets measured gets managed. Apex made overdue payments a tracked number their finance person owns, so it never drifts back.

The honesty at the end matters too: Max is clear it is not fully solved, invoices still drift past the 7-day terms near the end of each term. That is normal. The win is going from writing off 1 in 20 dollars to fewer than 1 in 200, and having a system that trends the right way. For most owners, that is the difference between cash-flow stress and a weight off the shoulders.

If getting paid on time is the thing quietly holding your business back, that is squarely a bookkeeping job: setting up the direct debit and reminder flow in Xero, and watching the overdue number for you. Book a free call and we will help you build the same kind of system.

Know a small business with a money lesson worth featuring in the Small Business Spotlight? Email info@truetally.com.au.