Late Payment Solutions for Australian Small Businesses

1. Large business payment practices

Many large businesses deliberately extend payment terms to 60 or 90 days to optimise their own cash position, at the direct expense of their smaller suppliers. The Payment Times Reporting Scheme data shows 68.9% of invoices are paid within 30 days — meaning almost a third are not.

2. Manual invoicing and follow-up processes

Many Australian SMEs still rely on manual email reminders or phone calls to chase overdue invoices. This is time-consuming, inconsistent, and easy to deprioritise when business owners are busy with operations.

3. Disputes and unclear terms

Invoice disputes — over amounts, delivery, or scope — are a common reason for delayed payment. Businesses without clear payment terms or dispute resolution processes are more vulnerable.

4. Economic pressures

Rising interest rates, inflation, and tighter credit conditions through 2024–2025 have squeezed cash flow across the supply chain, making it harder for businesses at every level to pay on time.

Payment Times Reporting Scheme (PTRS)

Established under the Payment Times Reporting Act 2020 and amended in July 2024, the PTRS requires large businesses (consolidated income over $100 million per year) to publicly report their payment terms and practices.

• Public reporting of payment times to small business suppliers
• The slowest 20% of payers in each industry can receive ministerial directions requiring them to publicly disclose their status as “slow small business payers”
• A new reporting portal launched in February 2026 with improved functionality
• Consolidated group reporting aligned with standard accounting practices

Prompt Payment Policy

The Australian Government has proposed a formal Prompt Payment Policy for government procurement, requiring departments and agencies to pay small business invoices within 20 calendar days.

Automated Accounts Receivable Software

AI-powered accounts receivable platforms automate the entire invoice follow-up process — from friendly reminders to escalation sequences — without requiring manual intervention. Key benefits include:

• Consistent follow-up timing — automated reminders go out on schedule regardless of how busy the business owner is
• Personalised messaging — AI can tailor the tone and content of each reminder based on the customer relationship and payment history
• Dispute detection — some platforms can identify when a customer is disputing an invoice rather than simply ignoring it
• Customer scoring — tracking payment reliability over time to identify high-risk accounts early

Australian-built options in this space include Unpaid, which offers AI-written follow-up reminders with Xero, QuickBooks, and MYOB integration from A$29/month. Other options include Chaser (UK-based), PaidNice (Australian), and InvoiceSherpa (US-based).

Direct Debit and PayTo

Setting up direct debit agreements or using Australia's PayTo infrastructure allows businesses to pull payments automatically on the due date, eliminating the reliance on customers to initiate payment. The Reserve Bank of Australia's Direct Debit sunset in 2030 is accelerating the shift to PayTo.

Invoice Financing and Factoring

For businesses that need immediate cash flow relief, invoice financing allows SMEs to borrow against unpaid invoices at a discount. Australian providers include ScotPac, Octet, and Moula. This doesn't solve the root cause but provides a cash flow bridge.

Tighter Payment Terms and Processes

Process-level improvements that cost nothing to implement:

• Shorten payment terms — move from 30 days to 14 days where the relationship allows
• Add “Pay Now” buttons to invoices with integrated payment gateways
• Send invoices immediately upon delivery rather than at month-end
• Require purchase order numbers upfront to prevent disputes
• Offer early payment discounts (e.g., 2% discount for payment within 7 days)