Aussie small biz hit hard as late payments surge

Australian businesses are feeling the pinch as late payments and bad debts continue to rise, according to the latest Payment Practices Barometer Australia 2025 report from Atradius. And if you’ve been chasing invoices like a dog after a postie, you’re definitely not alone.

Atradius surveyed businesses across the country earlier this year, and the findings paint a scary picture for Aussie businesses: late payments are locking up cash, debts are being written off, and many business owners are turning to loans and invoice financing just to stay afloat.

Relaxed payment terms, but at what cost?

Many small businesses are offering more flexible payment terms in an effort to hold onto customers, but there’s a catch. While being generous with credit might keep clients happy, it’s leaving plenty of Aussie businesses short on money. Working capital gaps are widening and businesses face an increasing reliance on external funding.

“There’s a growing reliance on short-term liquidity solutions like invoice financing and bank borrowing,” said Joe Lewis, Head of Client Services for Oceania at Atradius “However, these are not sustainable substitutes for long-term financial resilience. Flexible trade credit policies may help businesses remain competitive in the short term, though this approach comes at a cost.”

The numbers tell the story

Here’s a snapshot of what’s happening on the ground:

Only 37 per cent of B2B invoices were paid on time. Yep, that’s just over a third. More than half (52 per cent) were overdue. While 11 per cent of invoices had to be written off entirely as bad debts.

Two-thirds of businesses leaned on bank loans in the past year, followed by trade credit (60 per cent) and invoice financing (59 per cent). The average time it’s taking to get paid – known as DSO (days sales outstanding) – is 42 days, and for nearly one-third of businesses, it’s taking even longer than last year.

The top reason for late payments? Cash flow troubles at the customer’s end, followed by payment process delays and internal invoicing hiccups.

Industries under the pump

It’s not just one sector feeling the strain. Aussie businesses across the board are feeling the pinch.

Construction businesses are seeing cash reserves squeezed due to stock build-up and high borrowing costs, not to mention stricter compliance regulations adding extra pressure. Agri-food operators are turning to invoice financing to manage long payment cycles and unpredictable markets.

Even the steel sector, known for steadier payment practices, isn’t immune – with bad debts climbing and a continuing need for external finance.

What’s next?

Despite the growing pressure, most businesses expect more of the same when it comes to payment behaviour. In other words, they’re not banking on things getting better anytime soon.

“Working capital is more than a financial metric; it should be a strategic lever that drives growth. Improving payment practices, tightening credit controls, and preparing for regulatory change will be vital to preserving liquidity and protecting margins.”

The takeaway? If you’re running a business and battling late payments, you’re not alone – and now’s the moment to take a fresh look at how you manage credit, cash flow, and customer relationships.

Want to dig into the full report and check out what’s happening in your sector? Head over to: Atradius Payment Practices Barometer – Australia 2025

This post first appeared on Business Builders. You can read it here.

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