Your profit depends on customers paying on time.
The quoted margin assumes a payment date the customer rarely meets
A packaging supplier prices a repeat order using a short borrowing period for materials. The customer usually pays later than the quoted terms, extending the funding cost. The order still looks profitable in the sales report, but the owner has never tested how much margin remains after that extra time. The next quote needs a realistic collection assumption.
Calculate the margin before financing the wait
Start with the agreed selling price and complete delivery cost, including materials, labour and relevant overhead. Keep the calculation consistent with the accountant’s management-reporting approach. Identify the surplus available before collection-related costs.
Do not confuse the unpaid invoice value with profit. The business must still recover the cost of supplying the order, and a small original margin leaves less room for a longer funding period.
Attach actual costs to alternative payment dates
Use the applicable funding terms to estimate the additional interest and fees if payment arrives later. Ask the accountant to check the calculation and avoid counting the same cost twice. Separate recurring financing expense from a one-off establishment charge.
Compare the contractual date with the customer’s evidenced payment pattern and a reasonable slower case. Business.gov.au recommends showing cash receipts and payments by timing. These scenarios are planning assumptions, not a claim that the customer owes every resulting cost.
Find the point at which the return becomes unacceptable
Compare the remaining margin under each scenario against the return needed to justify the order. State the payment-delay assumption that changes the acceptance decision. A larger sale can still provide an inadequate return after its funding cost.
Keep credit loss separate from delay: a customer paying late and a customer never paying require different assumptions. Do not label a preferred collection date a guarantee or conceal possible nonpayment inside a small interest allowance.
Use the comparison in the next terms decision
Consider a different quoted price, properly agreed deposit, staged supply or shorter exposure where commercially suitable. Check contractual requirements before changing terms. Do not add retrospective fees merely because the original margin proved too optimistic.
After the order is collected, compare actual timing and funding expense with the estimate. Use that evidence for the next quote or credit decision. This review measures whether the work earns enough after financing the wait; immediate solvency questions still require separate advice.
Price the wait before accepting the next order
Calculate the starting margin and actual financing assumptions.
Compare realistic collection dates, identify the minimum acceptable return and agree future terms before committing.
Contact CRP about overdue accounts and practical business cash-flow support.