Australia has a measurably late payment culture. Research by Xero, the ABS, and the Payment Times Reporting Regulator consistently shows that Australian businesses — particularly large businesses paying small suppliers — pay later than comparable businesses in the UK, US, and parts of Europe. The gap between stated payment terms and actual payment behaviour is structural and persistent. For small and medium businesses on the receiving end of this culture, the cash flow consequences are significant.
The data
The Payment Times Reporting Regulator's 2024–25 report showed that large Australian businesses (over $100 million in annual revenue, required to report under the Payment Times Reporting Act 2020 (Cth)) paid 44% of their small business invoices within 30 days. While this represented an improvement from prior years, it means that more than half of small business invoices from large customers were paid in 31 days or more. Average payment times for these regulated entities were approximately 38 days.
For small and medium business payers (not subject to the reporting regime), average payment times are generally longer.
Structural causes
Several structural factors contribute to Australian late payment culture: the power imbalance between large buyers and small suppliers, which allows large buyers to dictate extended terms and enforce them through slow payment without practical consequence; the absence of a statutory right to interest on late payments (unlike the UK, where the Late Payment of Commercial Debts (Interest) Act 1998 creates a statutory interest right); the limited practical risk to large buyers from slow payment of small suppliers; and cultural acceptance of payment terms that are stated as 30 days but treated as 45 or 60 days in practice.
What individual businesses can do
- Issue invoices promptly: delay between delivery and invoicing extends the effective payment period. Issue on the day of delivery or service completion.
- State payment terms explicitly and enforce them: a creditor who accepts late payment without consequence is training their customer to pay late. Consistent, prompt follow-up at 7 days overdue — before the debt is significantly aged — signals that terms are taken seriously.
- Charge interest on overdue amounts: if your terms include an interest clause, apply it. Even a small interest charge creates a financial incentive to pay on time.
- Use the Payment Times Reporting Regulator: for small businesses dealing with regulated large business customers, the PTRR provides a complaints mechanism for persistent late payment. This is rarely used but available.
- Refer overdue accounts early: the most effective individual response to a late payment culture is not to allow accounts to age beyond 45–60 days before escalating.
Late payment culture is a systemic problem, but it is not unchangeable at the individual business level. The businesses that manage it best are those that treat their payment terms as a firm commitment — communicated clearly, enforced consistently, and escalated promptly.
Speak to Merion about how to build a more effective credit and collection process that pushes back against late payment culture.