Australia's late payment problem is well documented. The Australian Small Business and Family Enterprise Ombudsman has reported that small businesses wait an average of 26 days beyond agreed terms to be paid, with larger businesses paying even more slowly. But that average masks significant variation by industry. Some sectors pay reliably; others are serial late payers. Here are five of the worst.
1. Construction
Construction consistently sits at the top of late payment tables. Payment cycles are long, subcontractors are typically small businesses, and the practice of main contractors and head contractors holding retentions for months or years is entrenched. The Prompt Payment Code and Security of Payment legislation have improved things in some states, but the industry's structural dynamic — many small suppliers at the bottom of a long payment chain — means the problem persists. Average days late in construction regularly exceeds 30 days beyond terms.
2. Government contracting
Federal, state and local government agencies have improved their payment performance in recent years — the Australian Government has a target of paying suppliers within 20 days — but the reality for many small contractors remains slower than the policy suggests. Bureaucratic approval processes, complex invoicing requirements and the sheer scale of government procurement create delays that private-sector accounts do not.
3. Hospitality and accommodation
Hospitality businesses — restaurants, hotels, cafes and bars — are structurally cash-poor despite often being revenue-rich. Thin margins, high labour costs, seasonal trading and a high business failure rate make them consistent late payers to suppliers. Suppliers to the hospitality industry are advised to keep credit limits low, require deposits for large orders, and monitor accounts closely.
4. Health and aged care
The health sector's late payment problem reflects its funding structure: government-funded health providers and aged care operators depend on reimbursement cycles that do not always align with their supplier payment obligations. Regulatory changes — particularly in aged care — have created financial stress across the sector that has affected supplier payments significantly since 2023.
5. Retail
Large retailers frequently impose extended payment terms on suppliers — 60 or 90 days is common — and then pay at the end of those terms at best. For small consumer goods suppliers, this means financing large amounts of inventory while waiting for payment. The power imbalance between a large retailer and a small supplier makes negotiating better terms difficult, and the payment at the end of 90 days is never guaranteed if a retail chain is in financial difficulty.
What creditors in these sectors can do
Tighter credit limits, shorter terms, deposits for new accounts, PPSR registrations and earlier escalation are the practical responses. The underlying structural dynamics of these industries will not change quickly — but a creditor who understands them can set up their credit process to reduce exposure.
If you operate in one of these sectors and your receivables are under pressure, speak to Merion about a receivables review.