Growing Impact of Late Payments on Australian SMBs
According to GoCardless’s 2025 report titled ‘Pursuing Payments,’ a troubling trend has emerged in Australia’s small and medium business (SMB) sector. The report found that 17% of SMBs are experiencing financial losses exceeding $2,500 monthly due to late payments, an increase from 11% in 2024. This rise underscores a significant challenge for businesses trying to maintain cash flow.
Consequences for Investment and Growth
Ian Boyd, General Manager of GoCardless ANZ, highlighted that late payments are adversely affecting investment and productivity levels within the SMB landscape. Notably, 24% of surveyed businesses indicated they would consider expanding their operations, and 17% would hire additional staff if they received timely payments from their customers.
Linking Late Payments to Productivity Concerns
“In light of the ongoing discussions from the Productivity Commission’s interim reports and recent Federal government economic roundtables, productivity remains a pressing concern,” Boyd stated. He emphasized that the increase in late payments presents a considerable barrier to enhancing this key economic metric.
Modernizing Payment Infrastructure
Boyd suggested that businesses could alleviate financial strain caused by late payments by modernizing their payment systems. “While businesses cannot single-handedly eliminate the late payment crisis, there are proactive measures they can take to shield themselves from its adverse effects,” he advised.
Implementing Effective Payment Solutions
Businesses are encouraged to regularly assess their payment processes and embrace solutions such as eInvoicing, automated follow-ups, and modern payment methods like PayTo. These adjustments can streamline operations and improve financial health.
Benefits of New Payments Platform (NPP)
GoCardless also pointed out that adopting New Payments Platform (NPP) technology could simplify transactions and increase transparency, ultimately boosting productivity. Described by the Reserve Bank as “an open access infrastructure for fast payments in Australia,” the NPP is designed to facilitate easy payments for households, businesses, and government entities.
Operational Impacts of Late Payments
GoCardless’ findings reveal that late payments are influencing critical operational decisions among businesses. Over 26% of them considered raising prices to counteract the costs associated with delayed payments, while 23% contemplated delaying payments to their suppliers. Additionally, 34% of businesses considered refusing work from clients known for late payments.
Time and Effort Wasted on Invoice Collections
The survey further indicated that 1 in 5 businesses spend 6-12 working days annually chasing overdue invoices, with 58% of Australian SMBs investing up to 3 hours each week on payment collections. Boyd underscored that despite an improving economic climate in Australia, the effects of late payments are growing more severe, affecting both business expansion and the mental well-being of employees. He noted, “Many SMB leaders seem unaware of how to source and implement effective solutions to address the issue of late payments.”
Australia’s SMB Sector Faces Rising Challenges with Late Payments
The latest findings from a recent report reveal alarming trends regarding late payments in Australia’s small and medium businesses (SMBs). A significant 17% of these enterprises are reportedly losing over $2,500 each month due to late payments. This figure has increased from 11% in the previous year, highlighting an escalating issue that affects business operations and growth potential.
Impact on Growth and Employment
Ian Boyd, General Manager of GoCardless ANZ, underscores the detrimental effects that late payments have on investment and productivity within the SMB sector. According to survey responses, 24% of these businesses would consider expanding their operations, while 17% stated they would hire additional staff if payments from customers were received on time. This statistic reveals a direct correlation between timely payments and business growth.
The Urgent Need for Change
Boyd points out that productivity remains a pressing concern, especially in light of recent reports from the Productivity Commission and discussions from the Federal government economic roundtable. The evidence indicates that late payments are increasingly seen as an impediment to improving productivity metrics in Australia.
Modernizing Payment Infrastructure
To mitigate the financial stresses associated with late payments, Boyd encourages businesses to modernize their payment systems. “While businesses cannot solve the late payment crisis alone, there are actionable steps they can take to protect themselves,” he emphasizes. Regularly reviewing payment processes and adopting innovative solutions like e-invoicing, automated follow-ups, and alternative payment methods are essential strategies for businesses to reduce their vulnerability to late payments.
Embracing New Payment Technologies
Among the recommended solutions is the New Payments Platform (NPP), which simplifies transactions and enhances transparency. The Reserve Bank describes the NPP as “open access infrastructure for fast payments in Australia,” designed to facilitate efficient processing for households, businesses, and government agencies.
Consequences of Delayed Payments
Research from GoCardless reveals that late payments are forcing businesses to make tough operational decisions. Over a quarter (26%) of companies are contemplating price increases to cover the costs associated with payment delays. Additionally, 23% are considering paying their own suppliers late, while 34% may refuse future work from clients who consistently delay payments. These reactions highlight the serious operational challenges that late payments create for SMBs.
The Human Cost of Late Payments
The survey also indicates that around 20% of businesses spend between 6 to 12 working days annually pursuing overdue invoices. Moreover, 58% of SMBs in Australia dedicate up to three hours each week to payment collection, underscoring the considerable time and resources devoted to this issue. Boyd cautions that even with improving economic conditions, the negative impact of late payments on both growth and the mental health of SMB leaders is exacerbating.
In conclusion, the findings reflect an urgent need for SMBs to adopt more efficient payment solutions. By taking proactive steps to improve their payment infrastructure, businesses can better shield themselves from the financial ramifications of late payments, fostering an environment conducive to growth and stability.
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