EOFY Accounts Receivable Cleanup: Get Paid Before 30 June [2026 Guide]

28 February 2026 · 10 min read · PaidMate Team

The end of the Australian financial year on 30 June is one of the most important deadlines for small business owners. It is also one of the most overlooked opportunities to improve your cash position. While most business owners focus on tax deductions and BAS lodgements, savvy operators use the final weeks of June to do something even more powerful: recover overdue invoices before the year closes.

This guide walks you through a practical EOFY accounts receivable cleanup process using Xero, giving you the tools to collect more cash, write off genuine bad debts correctly, and start the new financial year with a clean ledger.

Why EOFY Is the Best Time to Chase Overdue Invoices

Most Australian businesses experience a natural shift in client behaviour as 30 June approaches. Larger companies and government clients often have budget pressures that make them more motivated to clear outstanding payables before their own financial year closes. For many organisations, unpaid invoices sitting on their books at EOFY create audit complications and approval headaches.

This creates a window of opportunity. A payment reminder sent in late May or early June often gets processed faster than the same reminder sent in February, simply because the recipient is already thinking about year-end clearances. Clients that have been dragging their feet for months may suddenly find the motivation to approve payment.

On your end, there are strong financial incentives to close out receivables before 30 June:

• Cash timing: Money received before 30 June is available for investment, loan repayments, or tax planning during the new year.
• Accurate financials: Your end-of-year balance sheet and profit and loss statement will better reflect reality if receivables are clean.
• Bad debt deductions: Properly written-off bad debts reduce your taxable income for the financial year in which they are written off.
• GST reclaim: If you account for GST on an accruals basis, you may be able to reclaim the GST on genuine bad debts on your June BAS.

Step 1: Run the Aged Receivables Report in Xero

Your EOFY AR cleanup starts with a clear picture of who owes you what. In Xero, navigate to Reports and search for Aged Receivables Summary. Run it as of today and export it to a spreadsheet.

The report will show each debtor bucketed into aging columns: Current, 1-30 days, 31-60 days, 61-90 days, and 90+ days. Pay particular attention to the 90+ column. Any invoice sitting there is either a relationship that needs urgent attention or a debt you may need to write off.

As you review the report, mentally categorise each debtor into one of three buckets:

Step 2: Prioritise by Dollar Value

Not all overdue invoices deserve equal attention. Before you start chasing, sort your export by outstanding balance from largest to smallest. Your time is finite, and spending 30 minutes chasing a $200 invoice when there is a $12,000 one sitting unpaid is poor resource allocation.

A simple rule: personally call every debtor who owes more than $500. For smaller amounts, automated reminders via a tool like PaidMate are sufficient and far more time-efficient. This segmented approach ensures you are applying human energy where it creates the most value.

Step 3: Send a Targeted EOFY Reminder Campaign

A well-crafted EOFY payment reminder performs significantly better than a standard reminder. Here is a template that balances professionalism with urgency:

Subject: Quick note before end of financial year — Invoice #[NUMBER]

"Hi [Name], as we head into the final weeks of the financial year, I wanted to follow up on Invoice #[NUMBER] for $[AMOUNT], which was due on [DATE]. If there is anything on your end holding up approval, I am happy to help sort it out quickly. If it has already been processed, please disregard this note. Either way, I appreciate your business and hope we can close this out before 30 June. [Pay Now link]"

The key elements that make this work:

• It references EOFY naturally without being aggressive
• It offers to help rather than demand payment
• It acknowledges the possibility of a processing delay
• It includes a direct payment link to remove friction

With PaidMate connected to your Xero account, you can trigger this kind of targeted reminder across all eligible invoices in minutes, with the right tone that protects your client relationships.

Step 4: Make a Personal Call for High-Value Accounts

For any invoice over $1,000 that is 30 days or more overdue, a phone call before EOFY is worth your time. Emails can be ignored. A friendly, professional phone call almost always results in either a commitment to pay by a specific date or an explanation of the hold-up that you can then address.

Keep notes in Xero against each contact record. If a client promises to pay by a certain date, note it, and follow up with a brief email confirming the arrangement. This creates a paper trail if you later need to escalate.

Step 5: Issue Formal Demand Letters for 90+ Day Accounts

For invoices that are more than 90 days overdue and have not responded to reminders or calls, it is time to escalate to a formal written demand. In Australia, a demand letter should include:

• The full invoice details (number, date, amount, services rendered)
• The original payment terms and the date the invoice became overdue
• A clear deadline for payment (typically 7-14 days)
• A statement of your intention to pursue legal or collection action if unpaid
• Your bank details and a payment link

The letter does not need to be aggressive. A firm but professional tone is most effective. Many debtors respond to a formal letter even after ignoring multiple emails simply because it signals that you are serious about recovery.

Step 6: Write Off Genuine Bad Debts in Xero Before 30 June

Once you have made a genuine attempt to recover a debt and concluded it is uncollectable, writing it off before 30 June has two benefits: it reduces your taxable income for the year, and it cleans up your receivables balance for the new financial year.

In Xero, the process is straightforward:

1. Go to Business → Invoices → Awaiting Payment
2. Find the invoice and open it
3. Click the three-dot menu and select Write Off
4. Xero will create a credit note coded to your Bad Debts expense account

If you are on cash basis GST accounting, check with your accountant or bookkeeper about whether you can also claim back the GST component. If you are on accruals basis and previously reported the GST, you may be able to claim it back as an adjustment on your June BAS under ATO bad debt provisions.

Step 7: Reconcile and Review Your AR Processes for Next Year

Once you have completed your EOFY AR cleanup, use the experience as a diagnostic tool. Look at your aged receivables data and ask: why did these invoices go overdue in the first place?

Common root causes include:

• Unclear payment terms: If your invoices do not state due dates prominently, clients may not feel urgency to pay.
• No automated reminders: Manual follow-up is inconsistent. Clients fall through the cracks when you get busy.
• Lack of online payment options: Every extra step between a client and payment means a higher chance of delay.
• Insufficient credit checks: Some clients consistently pay late because they have cash flow issues themselves. Knowing this upfront lets you adjust terms.

The businesses with the lowest debtor days are not necessarily the most aggressive chasers. They are the ones with systematic processes: clear terms, automated reminders that go out on time every time, and multiple frictionless ways to pay.

How PaidMate Helps at EOFY

Manually working through your aged receivables list before 30 June is time-consuming and emotionally draining. PaidMate integrates directly with Xero to automate the reminder process across all your overdue invoices simultaneously, using AI-crafted messages that maintain a professional, relationship-preserving tone.

Instead of spending your May and June evenings writing individual emails and tracking responses in a spreadsheet, PaidMate lets you configure your EOFY reminder sequence once and then handles the follow-ups automatically. You get notified when clients open reminders, when payments are made, and when accounts need your personal attention.

The goal, as always, is to get paid without burning bridges — especially important at EOFY when your clients are also stressed about their own year-end obligations.