Trade Credit Australia 2025: Guide for Businesses

Trade credit, the silent engine powering Australian business transactions, is taking on new significance in 2025. As supply chains adapt to global pressures and digital platforms streamline B2B payments, trade credit has become a strategic tool for managing cash flow and fuelling business growth. But with regulatory changes and shifting risk appetites, how should businesses approach supplier finance this year?

What is Trade Credit and Why Does It Matter in 2025?

At its core, trade credit allows businesses to buy goods or services from suppliers now and pay later—often within 30, 60, or even 90 days. This arrangement is especially vital for SMEs and wholesalers, who rely on deferred payment terms to keep stock moving and operations running smoothly.

• Cash Flow Flexibility: Businesses can sell inventory before payment is due, reducing the need for external financing.
• Stronger Supplier Relationships: Trust-based credit terms can lead to better pricing and priority during shortages.
• Growth Enablement: By freeing up working capital, businesses can invest in expansion, technology, or marketing.

In 2025, with interest rates stabilising after a volatile period and inflation easing, many suppliers are revisiting their credit terms. At the same time, digital trade credit platforms are emerging, offering automated credit checks and flexible limits—a marked shift from paper-based, manual processes.

Key Policy Updates and Market Trends

Australian regulators and industry bodies have enacted several changes impacting trade credit this year:

• Payment Times Reporting Act Update: From July 2025, the threshold for mandatory payment times reporting has dropped to $5 million annual turnover, meaning more businesses must publicly disclose how quickly they pay suppliers. This transparency aims to reduce late payments, a chronic issue for small businesses.
• Digital Verification and E-invoicing: The ATO’s push for e-invoicing adoption means faster invoice delivery and reduced disputes, which directly supports smoother trade credit transactions. As of May 2025, over 150,000 Australian businesses are registered for e-invoicing.
• Credit Insurance Tightening: Trade credit insurers are more selective in 2025, with stricter underwriting in sectors like retail and construction, due to ongoing insolvency risks. Businesses need to be proactive in monitoring their customers’ financial health.

Example: A Queensland manufacturing SME was able to extend its trade credit terms from 30 to 60 days in early 2025 after adopting e-invoicing and demonstrating prompt payment history, allowing it to ramp up production ahead of a major export contract.

Best Practices for Managing Trade Credit in a Shifting Environment

Effective trade credit management is more than just negotiating longer terms. Here’s how savvy Australian businesses are navigating 2025’s landscape:

• Leverage Technology: Platforms like CreditorWatch and illion now offer real-time credit risk monitoring, helping you assess the reliability of both customers and suppliers.
• Negotiate Terms Early: Don’t wait until cash flow is tight. Proactively discuss credit terms with suppliers, especially in industries facing supply chain bottlenecks.
• Monitor Payment Performance: Use digital dashboards to track outstanding receivables and payables. This visibility helps avoid late fees and maintain strong supplier relationships.
• Insure Against Non-payment: For larger exposures, consider trade credit insurance, but compare policies carefully as premiums and exclusions have shifted in 2025.

Real-world tip: A Sydney-based wholesaler recently adopted a digital trade credit platform, automating credit checks and reducing manual paperwork. The result? Faster onboarding of new customers and fewer payment disputes, freeing up staff to focus on sales.

Conclusion: Making Trade Credit Work for You in 2025

Trade credit remains a vital lever for Australian business growth, but 2025 brings new rules, tech, and risks. By staying informed about regulatory changes, embracing digital solutions, and keeping a close eye on payment behaviours, businesses can turn trade credit from a hidden liability into a powerful advantage.