Late payments push Australian small firms into debt

Late payments are taking a growing toll on Australian small and medium-sized businesses, with new GoCardless research showing more owners are waiting longer to get paid and spending significant time chasing overdue invoices.

The latest Pursuing Payments report, based on a YouGov survey of 500 Australian SMB owners and decision-makers, found 69% had received late payments. That is up from 63% in 2024, according to the report summary shared by GoCardless.

The research suggests a shift in expectations. It found 68% of Australian SMBs now see late payments as "an inevitable cost of doing business", while 48% said they are waiting longer to be paid than they were 12 months ago.

Time lost

Chasing overdue invoices is also consuming working hours. The study found 63% of Australian SMBs spend time pursuing payments. Among those businesses, the average was 1.5 hours per week, or about 78 hours a year, close to two standard business weeks lost to payment administration.

Delays often stretch well beyond the due date. The report found 41% of Australian SMBs that receive late payments wait more than 14 days past the due date on average, and 17% wait more than a month.

The findings point to a broader productivity hit at a time when many small firms face rising operating costs and tighter financing conditions. With limited cash buffers, small businesses can find delayed receivables harder to absorb than larger organisations.

Cost of avoidance

The research also looked at how business owners handle the conversations that late payments can trigger. It found 39% of SMBs avoided "money conversations" entirely in the past year.

Some owners reported they would accept direct financial losses rather than pursue unpaid invoices. Almost one in four Australian businesses (23%) said they would write off 6% or more of annual turnover to avoid awkward payment conversations. Among Gen Z and Millennial owners, that rose to 38%, compared with 16% for older generations.

Late payments also affected customer relationships. The report found 24% of businesses said payment issues had strained customer relationships, which it said can reinforce reluctance to raise the issue again.

Debt pressure

For many businesses, late payments are forcing changes in how they fund day-to-day operations. The study found 34% of Australian SMBs turned to credit cards or loans over the past year because late payments affected cash flow. In New Zealand, 31% of SMBs reported doing the same.

This can compound financial stress, particularly when short-term borrowing is used to cover regular operating expenses such as wages, rent, tax obligations, and supplier invoices. It also exposes businesses to higher interest costs and greater vulnerability if payment patterns worsen.

Personal impact

The report links late payments with increased stress among business leaders, particularly among those who avoid discussions about overdue invoices. Among Australian SMB leaders who avoided payment conversations in the last year, 38% reported increased workplace stress and 36% reported increased personal stress.

These pressures can have knock-on effects for staffing and service delivery, especially in smaller firms where owners juggle multiple roles and late payments require manual follow-up.

Ian Boyd, General Manager for Australia and New Zealand at GoCardless, described the findings as a warning sign for the wider economy.

"This report is a critical warning for the Australian economy. Late payments aren't just an inconvenience - they're actively suppressing growth, forcing businesses into debt, and taking a significant toll on the mental health of business owners on a massive scale," Boyd said.

Technology shift

Some businesses are looking for tools that reduce late payments and the manual work involved in following up on invoices. The report found 70% of Australian SMBs expressed interest in technology solutions that cut the volume of late payments.

Boyd argued that changing expectations around late payments is part of the solution, and pointed to automated payment methods as an option for some firms.

"Despite this, 68% of businesses still say late payments are an 'inevitable' cost. This mindset needs to change if businesses want to take back control. Our study reveals that 70% of SMBs are interested in technology solutions to reduce the volume of late payments, and we already have that tech. For example, automated payments, like Direct Debit, that pull the funds on the day they're due. Late payments are a complex issue, but small businesses everywhere can take steps today to combat the growing burden of late payments," Boyd said.

The study was conducted online in the second half of 2025 and covered private sector businesses with fewer than 250 employees. GoCardless said the data was weighted for regional and business-size representation across Australia, and that it also surveyed 300 New Zealand business owners and primary decision-makers.