New data reveals 17% of Australian SMEs lose over $2,500 monthly to late payments, forcing businesses into survival mode.
“Businesses can’t solve the late payment crisis by themselves, but there are things every business can do to better insulate themselves from the impact”
What’s happening: GoCardless’s 2025 ‘Pursuing Payments’ report reveals Australian and New Zealand small businesses are losing substantial revenue monthly to late payments, with 17% of Australian SMEs estimating losses exceeding $2,500 per month compared to 11% in 2024.
Why this matters: The crisis is forcing businesses to delay growth plans, freeze hiring, and consider closure. With 68% now accepting late payments as inevitable, the issue threatens Australia’s economic productivity and small business viability nationwide.
The late payment crisis afflicting Australian small and medium businesses has reached alarming new heights, according to fresh research that paints a picture of an economy where cash flow problems are becoming the norm rather than the exception.
GoCardless’s 2025 ‘Pursuing Payments’ report, surveying 800 business owners and decision-makers across Australia and New Zealand, reveals that more than 1 in 6 (17%) Australian SMBs estimate losing more than $2,500 per month on average due to late payments, compared to 11% in 2024. The escalation represents a concerning trend that’s reshaping how businesses operate.
The time burden alone is staggering. 1 in 5 companies (20% of respondents) now wholly devoting 6 to 12 working days a year on average to chasing overdue payments, turning business owners into reluctant debt collectors rather than focusing on growth and innovation.
This aligns with broader industry data showing the rate of B2B payments that are 60+ days in arrears is up 21.4 per cent year-on-year and 7.9 per cent since January, according to CreditorWatch research from October 2024.
Growth plans frozen
The financial drain extends far beyond administrative inconvenience. 63% of Australian businesses and 62% of New Zealand businesses saying they are losing money – some even reporting estimated losses of over $10,000 per month on average – to late payments.
Perhaps most concerning is how the crisis is stifling business expansion. If customers paid on time, 24% of Australian and 32% of New Zealand businesses would invest in expanding their businesses, and 17% and 14% respectively would be directly hiring more people.
This represents a significant drag on economic productivity at a time when Australia’s jobs market is already showing signs of stagnation. The implications reach beyond individual businesses to national economic performance.
“Even as we see economic conditions improving in Australia, the impact of late payments is only worsening for businesses across both Australia and New Zealand,” says Ian Boyd, General Manager, Australia and New Zealand at GoCardless.
Businesses are fundamentally altering their operating models in response. 26% of Australian and 29% of New Zealand businesses say they’ve considered adjusted pricing to offset payment delays, while 34% in Australia and 28% in New Zealand have considered refusing future work from chronic late payers.
Mental health toll
The crisis extends beyond balance sheets to personal wellbeing. Of Aussie SMB decision-makers who avoided a conversation about money in the last 12 months, 38% said it resulted in increased stress at work, and 36% reported increased stress for them personally. In NZ, this impacted 43% and 48% of respondents, respectively.
Most alarmingly, 10% of all respondents have considered closing their business due to the ongoing payment challenges. Of those who have avoided conversations about money with customers in the past 12 months, 29% have cited immediate cashflow issues due to late payments, and 27% reported overall financial losses.
The psychological shift is profound. A striking 68% of all respondents now agree that late payments are simply an ‘inevitable cost’ of doing business. This represents a concerning normalisation of what should be considered unacceptable business practice.
“This is not only having a huge toll on business growth, but also on the mental health of individuals within businesses. It’s clear many SMB decision-makers aren’t aware of how to source and integrate solutions that can help them solve the pursuing payments puzzle,” Boyd explains.
Solutions emerging
Despite the grim outlook, Boyd suggests practical steps businesses can take to mitigate the impact. His recommendations focus on modernising payment systems and embracing automation.
“Businesses can’t solve the late payment crisis by themselves, but there are things every business can do to better insulate themselves from the impact,” he says. “Firstly, every business should be routinely reviewing its payments stack to ensure there are no redundant or costly payment methods on offer that are causing friction.”
The solution involves embracing digital payment infrastructure. “All businesses that rely on invoicing should be embracing eInvoicing and using automated follow-ups to reduce both admin time and the risk of awkward conversations with customers,” Boyd advises.
For businesses seeking more control, Boyd points to emerging payment technologies. “Where feasible, the NPP’s new payment method, PayTo, can make repeat transactions simpler and more transparent for both payer and payee, solving some of the key issues around customers missing due dates.”
The crisis reflects broader challenges facing Australia’s small business sector, which according to government data employs almost half of the Australian workforce. Previous research from Xero indicated late payments cost Aussie small businesses $1.1 billion per year, demonstrating the scale of economic impact.
As businesses navigate this challenging landscape, the focus shifts from simply managing late payments to actively preventing them through smarter payment infrastructure and clearer customer communication strategies.
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