Australian businesses grapple rise in late payments

Australian companies tell our Payment Practices Survey they are facing liquidity challenges

Just when businesses in Australia are finally emerging from the hangovers of the pandemic recession, a global trade war has broken out. 

Admittedly many businesses are being squeezed as they pay back Covid government support. But the US tariffs are adding an extra layer of unpredictability, hampering strategic planning and adding another cloud in the previously blue sky.

To the casual observer, US tariffs are happening elsewhere, focused as they are on Canada, Mexico, China and Europe. Look closer and the local story is one of uncertainty, played out late payments, strained liquidity and an increased reliance on external financing.

Although Australia may be an island continent, it is very much part of the global value chain and many businesses have told us that the uncertain market conditions are impacting their financial and business planning.    

In fact, according to the results of our Payment Practices Barometer survey more than half of all B2B invoices are now overdue. Even more concerning, more than 10% can be classed as bad debts.

Which sectors are struggling with late payments?

The Payment Practices Barometer report focuses on Australian steel, construction and agri-food businesses. Liquidity management is a big issue for the steel industry in Australia which is facing a rise in bad debts. 

When interviewed for the survey, many stressed the importance of being responsive and adaptable to unpredictable economic and market conditions. Indeed, many businesses in the sector are delaying payments to suppliers and turning to factoring as they try to maintain liquidity despite external challenges.

The construction industry is facing an increase in bad debts, driven by financial difficulties among customers. The preference among the businesses we spoke to is to underpin liquidity with bank loans. With higher interest rates, this can be a costly option.

Australian agri-food businesses are offering longer payment terms to stay competitive despite worsening payment behaviour from B2B customers. 

What insights can the Payments Survey give multinationals in Australia?

The biggest takeaway from the survey is buckle up, we’re in for a rocky ride. Australia may not (yet) be the direct target of US tariffs. But businesses in Australia are unlikely to escape the trade war unscathed and many are already telling our survey that they feel uncertain about the future.

For multinationals especially, with supply chains and customers that span the world, an added layer of protection in the form of trade credit insurance is surely a must. Not only does it add peace of mind for unpaid invoices but, arguably more valuable during a period of economic turmoil, it provides insights and intelligence into the creditworthiness of millions of businesses around the world. 

You can read the key findings of the Australia Payment Practices Barometer survey results below.  
 

Download our Payment Practices Barometer: Australia 2025 report