Average Collection Period Australia 2025: What It Means for Your Business

When it comes to business finances, the speed at which you collect payments can make or break your cash flow. The average collection period (ACP) is a critical metric for any Australian enterprise looking to stay afloat in 2025’s competitive landscape. But what does ACP really tell you, and why has it become a hot topic this year?

What Is the Average Collection Period—and Why Is It Crucial in 2025?

The average collection period measures the average number of days it takes a business to collect payments from its customers after a sale. In simple terms, it reveals how long your cash is tied up in accounts receivable. In 2025, with rising interest rates and tighter lending conditions, monitoring ACP is more important than ever. Slow collections can cripple your ability to pay suppliers, cover payroll, or invest in growth opportunities.

For Australian SMEs, the ACP is under the spotlight thanks to fresh government scrutiny. The Treasury’s 2025 Payment Times Reporting Review is pushing for greater transparency and faster payment standards, especially for small suppliers. Many large corporations are now publicly reporting their payment performance, adding pressure to reduce ACP across the board.

How Are Australian Businesses Performing?

So, what does the data say? According to the latest 2025 figures from CreditorWatch, the average collection period for Australian businesses has edged up to 52 days—a slight increase from 2024. This is above the government’s recommended 30-day standard, and a red flag for sectors like construction, retail, and wholesale trade, where cash flow is already stretched.

• Construction: ACP averages 58 days. Subcontractors often wait months for payment.

• Retail: ACP is around 45 days, impacted by tight consumer spending and extended credit terms.

• Professional services: ACP is shorter at 32 days, thanks to digital invoicing and upfront deposits.

Late payments aren’t just an inconvenience—they’re a systemic risk. The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) estimates that late payments cost the sector billions annually in lost productivity and financing costs. With the Reserve Bank maintaining a high cash rate in 2025, businesses are feeling the pinch on both sides.

Strategies to Improve Your Average Collection Period

If your ACP is creeping up, you’re not alone. But there are practical steps Australian businesses can take to speed up collections and strengthen their cash position:

• Go digital: Use e-invoicing platforms and automated reminders to cut down lag time.

• Review your credit policies: Tighten terms for slow-paying customers or offer early payment discounts.

• Monitor your receivables: Track ACP monthly, not just at year-end, and flag overdue accounts early.

• Leverage government tools: The Payment Times Reporting Portal and ASBFEO’s payment dispute services can help address chronic late payers.

• Consider invoice financing: For businesses under pressure, invoice finance providers can advance funds against your receivables, improving liquidity without taking on more debt.

In 2025, demonstrating a short and steady ACP isn’t just good housekeeping—it’s a marker of resilience. Lenders, suppliers, and even potential buyers are scrutinising payment cycles as a sign of business health.

The Bottom Line: Don’t Let Slow Payments Sink Your Business

Average collection period isn’t just an accounting formula—it’s a window into your business’s financial fitness. With payment times under regulatory scrutiny and economic conditions still uncertain in 2025, Australian businesses can’t afford to ignore their ACP. Actively managing your collections process can unlock cash, reduce stress, and give you the edge when opportunities arise.