Late payment report: What XSBI data shows about how long Australian small businesses wait to get paid

Published Tuesday 25 August 2026

Table of contents

• How long are Australian small businesses waiting to get paid?
• What does the XSBI late payment data show?
• How do Australia's late payment times compare globally?
• What's driving late payments for small businesses?
• How do late payments affect small business cash flow?
• Why late payments matter for Payday Super compliance
• How can small businesses get paid on time?
• Manage late payments and protect your cash flow with Xero
• FAQs on late payments for small businesses in Australia

Key takeaways

• Australian small businesses wait an average of 6.6 days past the due date to get paid, according to Xero Small Business Insights (XSBI) data for the December 2025 quarter; that's the second shortest wait since records began in 2017.
• While the trend is improving, late payments still cost the average Australian small business $15,257 per year in lost revenue, wasted time, and financing costs—totalling an estimated $50 billion annually across the sector.
• With Payday Super taking effect on 1 July 2026, cash flow gaps caused by late payments could make it harder for small businesses to meet their superannuation obligations on time.
• Setting clear payment terms, invoicing promptly, following up on overdue invoices, and offering multiple payment options can all help you get paid closer to the due date.

How long are Australian small businesses waiting to get paid?

Late payments remain one of the most persistent cash flow challenges for small businesses in Australia. While the situation is improving, the data shows that most small businesses are still waiting well beyond their invoice due dates.

The current state of late payments in Australia

According to Xero Small Business Insights, Australian small businesses were paid an average of 6.6 days late in the December 2025 quarter. That's the second shortest late payment period since XSBI records began in 2017, and well below the long-term average of approximately eight days.

But averages don't tell the full story. The same data shows that clients take an average of 22.1 days to pay an invoice, with payments arriving 6.1 days past the due date on average. According to March 2026 Xero research, the average Australian small business lost $15,257 over the last financial year due to late payments.

Meanwhile, research from Pinch Payments found that 53% of trade credit invoices sent by small businesses are paid late. For many business owners, chasing payments is a regular part of the working week.

What does the XSBI late payment data show?

Xero Small Business Insights tracks late payment data across five countries, providing one of the most detailed views of how long small businesses wait to get paid. In Australia, the data over the past two years tells a cautiously positive story.

Payment time trends over the past 2 years

Between March 2024 and March 2026, Australia's average late payment time gradually declined from closer to the long-term average of eight days down to 6.6 days. The improvement hasn't been a straight line; seasonal fluctuations are common, with payment times often stretching over the December and January holiday period before tightening again.

Importantly, the improvement coincides with broader economic resilience. In the March 2026 quarter, XSBI data showed Australian small business sales grew 7.2% year on year, jobs grew 3.4%, and wages rose 2.7%. Monthly sales in March 2026 were up 10.9% year on year, leading all five XSBI countries.

What's behind the improvement?

Several factors appear to be contributing to shorter late payment times in Australia:

• Growing adoption of digital invoicing and online payment options, which make it easier for clients to pay promptly
• Government policy pressure through the Payment Times Reporting Scheme, which requires large businesses to publicly report how quickly they pay small business suppliers
• Greater awareness of the impact late payments have on small businesses, driven by public data like XSBI and advocacy from bodies like the Australian Small Business and Family Enterprise Ombudsman (ASBFEO)

While these factors are encouraging, 6.6 days late is still late. For many small businesses, even a few days' delay can create a cash flow gap that affects wages, supplier payments, and day-to-day operations.

How do Australia's late payment times compare globally?

Australia's late payment performance looks strong when compared with other countries tracked by XSBI. Average late payment times by country are as follows:

• Australia: 6.6 days late (improving, second shortest on record)
• United Kingdom: approximately 8 days late (improving)
• United States: 8.5 days late (improving, down from 9.0 days)
• Canada: 11.6 days late (worsening).
• New Zealand: data available but trending in line with Australia.

Australia and the UK are the only two XSBI countries where late payment times are consistently trending downward. In the US and Canada, late payment times have been moving in the opposite direction, suggesting that the policy and digital payment shifts happening in Australia are having a measurable effect.

That said, Australia's 6.6-day average doesn't mean every business is getting paid close to on time. Some industries and regions experience significantly longer delays, and 41% of Australian small businesses report payments arriving more than 14 days overdue.

What's driving late payments for small businesses?

Understanding why payments arrive late is the first step toward fixing the problem. While every business relationship is different, certain patterns come up consistently in late payment data and surveys.

Common reasons for late payments

Late payments rarely happen because a client simply forgets. The most common drivers include:

• Cash flow problems at the payer's end, particularly for businesses that are themselves waiting on their own invoices to be paid.
• Unclear or missing payment terms on invoices, which can lead to confusion about when payment is actually due.
• Deliberate payment delays by larger businesses that use extended payment terms to manage their own working capital.
• Administrative disorganisation, such as sending invoices to the wrong contact or missing key details that trigger payment approval processes.
• Economic pressures like rising operating costs, which can cause businesses to prioritise certain payments over others.

Industries most affected

Late payments don't affect every industry equally. Research from Pinch Payments found that wholesalers face the longest delays, with payments arriving an average of 35 days overdue. Other industries commonly affected include agriculture, health, retail, and education.

B2B service providers such as IT consultants, marketing agencies, and tradespeople are also frequently impacted. These businesses often complete work weeks or months before invoicing, creating long cash conversion cycles even before any late payment delay begins.

How do late payments affect small business cash flow?

The cost of late payments goes well beyond the invoice amount. When payments arrive late, the ripple effects touch every part of a small business.

Financial cost

The numbers paint a clear picture. Late payments cost the average Australian small business $15,257 per year, according to March 2026 Xero research. A 2025 GoCardless survey found that 63% of Australian businesses lose money directly because of late payments, and 17% estimate losing more than $2,500 every month.

At a broader level, Pinch Payments estimates that late payments cost Australian small and medium enterprises approximately $50 billion annually when factoring in lost productivity, financing costs, and missed opportunities. The same research found that $7 billion in working capital could be transferred to small businesses if large businesses simply paid on time.

Hidden costs

The financial numbers are significant, but the hidden costs can be just as damaging. According to the GoCardless survey:

• 20% of businesses spend six to 12 working days per year chasing overdue payments.
• 38% of respondents reported increased workplace stress as a direct result of late payments.
• 24% of business owners delay paying themselves in order to cover expenses when payments are late.
• 10% have considered closing their business altogether because of persistent cash flow pressure caused by late payments.

Research from Pinch Payments also found that 39% of small business owners say their mental wellbeing has suffered because of late payments. The stress of not knowing when money will arrive, combined with the time spent chasing invoices, takes a real toll.

Why late payments matter for Payday Super compliance

Late payments aren't just a cash flow problem; they're about to become a compliance risk. With Payday Super taking effect on 1 July 2026, the connection between late payments and superannuation obligations is becoming harder to ignore.

What is Payday Super?

From 1 July 2026, employers will be required to pay superannuation contributions at the same time as salary and wages, rather than quarterly. This is a significant change for small businesses that currently have up to 28 days after the end of each quarter to make super payments.

Under the new rules, super must be paid on or around each payday. That means your cash flow needs to be predictable enough to cover wages and super at the same time, every pay cycle.

How late payments create a compliance risk

A 2024 survey found that 84% of Australian small businesses say late payments could prevent them from meeting their Payday Super obligations. When invoices aren't paid on time, the cash simply isn't there to cover both wages and super contributions on payday.

The penalties for failing to pay super on time can include the super guarantee charge (SGC). The SGC may include interest and an administration fee on top of the unpaid amount.

Check the ATO website for the latest details on SGC obligations. For businesses already stretched by late payments, the move to Payday Super adds urgency to getting invoices paid on time.

How can small businesses get paid on time?

You can't control when every client pays, but you can put systems in place that make it easier for them to pay on time and harder for invoices to slip through the cracks. Here are four practical steps to help reduce late payments:

1. Set clear payment terms upfront

Your payment terms should be agreed before any work begins, not buried in fine print on the first invoice. Be specific about the due date, accepted payment methods, and any consequences for late payment.

Consider setting shorter payment terms where possible. Moving from 30-day to 14-day terms can significantly reduce the time you're waiting for payment. If you're working with a new client, it's worth discussing terms before the first job starts.

2. Invoice promptly and accurately

The sooner you send an invoice, the sooner the payment clock starts. Delays in invoicing are one of the most common, and most avoidable, causes of late payment.

Make sure every invoice includes the correct amount, a clear description of the work completed, the due date, and your payment details. Missing or incorrect information can trigger disputes or approval delays that push payment out by weeks.

3. Follow up on overdue invoices

Don't wait for clients to remember. A structured follow-up process makes a significant difference to how quickly you get paid.

Send a polite reminder within one to three days of the due date. If there's no response within 14 days, follow up with a phone call or a more formal written reminder. For invoices that remain unpaid beyond 30 days, consider escalating to a formal letter of demand. The Australian Government's guide on unpaid invoices outlines the steps you can take, including dispute resolution services and small claims action.

4. Offer multiple payment options

The easier you make it to pay, the faster payments tend to arrive. Including an online payment link directly on your invoice removes friction and lets clients pay in a few clicks. You can also explore direct debit arrangements for recurring clients, which take the manual step out of the process entirely.

For a detailed guide on reducing payment delays, check out this Xero guide on how to reduce payment delays.

Manage late payments and protect your cash flow with Xero

Late payments don't have to derail your cash flow. Xero's online invoicing tools let you create and send professional invoices quickly, set up automatic payment reminders, and offer your clients online payment options so they can pay directly from the invoice. Xero customers who use online invoice payments get paid up to twice as fast.

With real-time visibility into what's been paid, what's overdue, and what's coming up, you can stay on top of your cash flow and plan ahead with confidence. And with Payday Super on the horizon, having a clear view of your incoming payments has never been more important.

Ready to take control of your invoicing? Try Xero today and get one month free.

FAQs on late payments for small businesses in Australia

Here are answers to some of the most common questions about late payments in Australia.

Can you charge a late payment fee in Australia?

Yes, you can charge a late payment fee if it's clearly stated in your payment terms and agreed to by your client before the work begins. The fee must represent a genuine pre-estimate of the loss you'll incur from the late payment; Australian courts won't enforce penalty clauses that are considered excessive or punitive.

What is the average payment time for Australian small businesses?

XSBI data shows Australian small businesses are currently paid 6.6 days late on average, well below the long-term average of approximately eight days. Australia also leads the XSBI group globally, with Canada (11.6 days) trending in the wrong direction, while the US (8.5 days) has recently improved.

What is the Payment Times Reporting Scheme?

The Payment Times Reporting Scheme is an Australian Government initiative under the Payment Times Reporting Act 2020 that requires large businesses (with annual revenue above $100 million) to publicly report how quickly they pay small business suppliers. Small businesses can lodge complaints with the ASBFEO if they believe a large business isn't meeting its obligations.

How long should you wait before chasing a late payment?

Send a reminder within a few days of the due date and escalate to a phone call if you haven't heard back within two weeks. If the invoice remains outstanding after 30 to 60 days, services like the ASBFEO's dispute resolution can help you resolve the matter without going to court.

What's the difference between an outstanding and overdue invoice?

An outstanding invoice is any unpaid invoice regardless of whether the due date has passed, while an overdue invoice is one where the due date has passed without payment. All overdue invoices are outstanding, but an outstanding invoice may simply not be due yet.