Late-paying customers in 2026: what the payment times data shows, and how to fund the gap

A late-paying customer is one who settles an invoice after the terms you agreed, leaving your business to fund wages, suppliers and tax in the meantime. For a small supplier to a large organisation, that gap can be the single biggest drain on working capital. In 2026 there is finally solid public data on how big businesses actually pay, and it tells a two-sided story.

This briefing covers what the official payment times figures show, how to turn your own debtor ledger into a dollar figure, and which finance structures suit which kind of gap. For the collection side of the problem, our earlier guide on customers paying late sets out the fixes to try first.

What does the latest payment times data show?

On average, things have improved; at the slow end, they have not. The Payment Times Reporting Regulator’s update of 24 August 2026, covering reporting cycle 10 (1 July to 31 December 2025), found:

• Common payment terms reported by large businesses averaged 29 days and have been stable for three reporting cycles.
• The average proportion of invoices paid within 30 days improved by 6.6 percentage points compared with the first reporting cycle.
• Public administration and safety was the strongest industry for on-time payment, at 76.4 per cent of invoices paid on time.

The regulator’s January 2026 update added the less comfortable figure. For the period 1 January to 30 June 2025, the average number of days large businesses took to pay 95 per cent of their small business invoices rose to 64 days, up from 58. In the regulator’s words, while average payment times were relatively stable, the slowest payments were getting slower, and that disproportionately affects small business cash flow.

Our reading: if you supply big organisations, plan around their slowest behaviour, not their stated terms. A 30-day invoice that is routinely paid at 60 days needs twice the working capital.

Who has to report how quickly they pay?

Large businesses. Reforms that commenced on 7 September 2024 require entities with annual consolidated revenue of $100 million or more, plus certain Commonwealth corporate entities, to report. The reforms also introduced two public labels:

Label	What it means
Fast small business payer	Pays small business suppliers within 20 days
Slow small business payer	In the slowest 20 per cent overall, or within its industry

The Payment Times Reports Register lets anyone search reports and industry statistics. Before you agree terms with a new major customer, look them up. A customer flagged as a slow payer is not necessarily a bad customer, but you should price and fund the relationship accordingly.

Why are small businesses feeling late payment more in 2026?

Because they have less room. The RBA’s October 2026 Financial Stability Review notes that smaller businesses already face more cash-flow pressure than larger ones, measured by overdue trade credit, with construction, hospitality and retail under particular strain where cost increases can’t be passed on.

The Review also found that around 70 per cent of companies entering insolvency had no debt to secured creditors. In other words, many small company failures are driven by unpaid trade and tax obligations rather than bank loans. Slow money in, combined with fixed money out, is exactly how those obligations build.

How do you measure your own late-payment gap?

Turn the problem into two numbers: days and dollars. Work through these steps with your accounting software open:

1. Calculate average debtor days. Divide trade debtors by annual credit sales, then multiply by 365.
2. Calculate your outgoing days. How quickly you pay suppliers, plus the weekly or fortnightly rhythm of payroll and super.
3. Find the gap. Debtor days minus outgoing days.
4. Put a dollar figure on it. Average daily credit sales multiplied by the gap in days.
5. Stress-test it. Repeat using your slowest three customers’ actual payment days and your busiest month’s sales.

Measure	How to calculate	What a lender reads into it
Debtor days	Debtors ÷ annual credit sales × 365	How long cash is tied up
Customer concentration	Largest customer’s share of debtors	Risk if one payer slows further
Ageing profile	Share of invoices over 60 and 90 days	Collection discipline and dispute risk
Gap in dollars	Daily credit sales × gap days	The size of facility that makes sense

Want a second opinion on how big your gap really is? Share the numbers with a lending specialist — no credit check is needed to ask.

Which finance matches which kind of gap?

Different gaps need different tools. Here’s how we’d match them:

Kind of gap	Structure that usually fits	Why
Growing debtor book, creditworthy business customers	Invoice finance	Advances against invoices, so the limit scales with sales
Steady, modest gap that rises and falls	Business line of credit	Draw when customers are slow, repay when they pay
Supplier payments are the pinch	Trade or supplier finance	Pays suppliers up front while you wait on debtors
One large contract paid in arrears	Short-term loan, often secured	Covers a defined period with a clear exit
Large, persistent gap in a profitable business	Property-secured facility	Longer term and larger limits

Invoice finance providers assess your customers as much as your business, so a ledger dominated by large, reliable payers is a strength. A line of credit is sized on your business overall and won’t automatically grow with sales. For trading businesses without property, cash-flow loans sized on bank statements are another option. Other routes are covered in our funding by purpose hub. If suppliers are the immediate pressure, see supplier and trade finance.

What should you do before you borrow?

Tighten the process so the facility you take is no bigger than it needs to be. The Australian Small Business and Family Enterprise Ombudsman suggests:

• sending invoices electronically to reduce errors;
• checking invoice details match the order and delivery records;
• confirming the customer has received the invoice;
• checking payment status about 10 days before the due date;
• contacting the customer’s accounts team as soon as a payment is overdue;
• using its Dispute Support tool if follow-up fails.

Should you build late payment into your prices?

Yes, for customers you know will pay slowly. Funding a gap has a real cost, whether it is a facility fee, the margin on a line of credit or simply the supplier discount you miss. That cost belongs in the quote, not in your own margin. A practical approach:

1. Look up the customer on the Payment Times Reports Register before quoting.
2. Estimate realistic payment days, not the contractual ones.
3. Work out the finance cost in dollars of carrying that invoice for the extra days, using the total cost of your actual facility.
4. Add it to the price, or negotiate a deposit, progress claims or shorter terms instead.
5. Review it each year, because a customer’s payment behaviour and your facility costs both change.

Large customers rarely change their payment cycle for one supplier. They will often accept a price that reflects it, particularly when the alternative is a supplier that can’t deliver because it ran out of cash.

An illustrative example

Illustrative only. Round numbers; not a real business or a lender’s offer.

An electrical contractor turns over $2.4 million a year, nearly all on 30-day terms to builders and facilities managers. Credit sales average about $6,600 a day. Its debtor days have drifted to 62, while it pays suppliers at around 30 days and runs a weekly payroll with super now leaving every pay run. The gap is roughly 32 days, or about $211,000 tied up beyond its own obligations.

Two of its largest customers show up on the Payment Times Reports Register with typical payment times well past their stated terms. Rather than a lump-sum loan, the owner sets up an invoice finance facility over the builder invoices, which grows as the contract book does, and keeps a smaller line of credit for the weeks when retail jobs dip. The gap is funded, and each cost is tied to the problem it solves.

Is a slow-paying customer squeezing your cash right now?

You can’t make every customer pay on time, but you can stop their habits from setting your limits. Start a short enquiry with your turnover, terms and debtor position, and a specialist will tell you which structure fits the gap you actually have. There’s no credit check at the start, your details aren’t passed along a chain of lenders, and a real person reviews your ledger. Please give accurate figures for debtors and payment days; they decide which facility is right first time.