Accounts receivable (A/R)—the money owed by customers for delivered goods or services—is a critical component of a company’s financial health. Efficient management of A/R ensures the timely collection of payments, supports operational continuity, and fuels business growth. Conversely, inefficiencies in A/R processes can trigger a range of challenges, such as delayed payments, billing disputes, invoice errors, and increased risk of bad debt. These issues strain cash flow by extending the gap between service delivery and cash inflow. 

Australian Accounts Receivable Trends & Insights in 2024/25

Recent data highlights growing pressures on Australian businesses’ cash flow due to A/R challenges. 

• The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) recorded a significant 27% rise in requests for assistance from small businesses during the December 2024 quarter, underscoring growing financial stress.
• According to the Business NSW December 2024 Business Conditions Index, 39% of businesses reported delays beyond usual expectations from their customers. 
• The Payment Times Reporting Regulator’s July 2025 Update reveals that the average small business invoice payment period extends to 37 days across industries, with 95% of invoices clearing within 56 days—almost twice the standard 29-day payment term.
• Sectors such as Manufacturing and Construction face some of the slowest payment practices, with 95% of invoices paid within 67 and 60 days, respectively.  

These A/R challenges unfold amid a complex economic landscape. KPMG Australia’s Q2 2025 Economic Outlook has revealed slowed economic momentum, weak private sector activity, and global trade uncertainties—factors that collectively complicate revenue stability and cash flow management. 

Sector-Specific A/R Challenges and Their Impact

Accounts receivable challenges are not uniform across industries. Each sector encounters distinct A/R issues shaped by its operational characteristics, customer behaviours, and market dynamics. 

Understanding these differences is essential, as the nature and severity of A/R challenges—and their subsequent effects on cash flow—can vary substantially from one industry to another. 

Banking & Financial Services

Though fundamentally focused on money management, the banking and financial services sectors face A/R challenges rooted in high transaction volumes and stringent regulatory requirements. Financial institutions must reconcile payments from diverse financial products – ranging from loans and investments to deposits, credit cards, and advisory services – often across multiple digital platforms. 

Adding to this complexity are rigorous compliance requirements enforced by financial authorities such as the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC). 

Impact on Cash Flow: Inefficient reconciliation processes can cause errors and delays that inflate A/R ledger balances while actual cash remains uncollected. More critically, non-compliance with regulatory standards risks costly financial penalties. This can directly strain cash reserves and potentially affect the capital these financial institutions depend on for daily operations and strategic investments.  

Construction & Trade

The construction industry faces unique accounts receivable challenges that substantially extend payment cycles. Lengthy project timelines, progress payment schedules, retentions, and frequent contract disputes often stretch the A/R collection period over months or even years. Many projects span several years, and retention sums—withheld as security until the completion of the Defects Liability Period—can remain inaccessible long after work completion. 

Impact on Cash Flow: Delays in cash inflow impose severe working capital pressures. Construction firms typically rely on their internal funds or resort to short-term borrowing, such as loans and overdrafts, to meet immediate expenses like payroll, materials, and subcontractor payments while awaiting the release of retained funds. 

Education

Australian educational institutions manage complex revenue streams, mixing upfront student fees, flexible payment plans, and multifaceted government funding programs like HECS-HELP and various state-based initiatives. Collecting overdue payments from students and their families requires a careful, resource-intensive approach, as institutions strive to preserve positive community relationships.

The introduction and growing popularity of Fee-Free TAFE programs—highlighted in recent parliamentary reports—reshape income flows by shifting revenue from direct payments to government-funded models. 

Impact on Cash Flow: These variables create irregular, unpredictable cash flow, complicating budgeting for critical expenses like staff salaries, educational materials, and facility maintenance. Such financial volatility can lead to deferred investments and operational challenges.  

Healthcare & Medical

Healthcare providers operate within a multi-payer ecosystem involving patients, private insurers, and government programs such as Medicare. The billing cycle is complicated by detailed coding requirements, claims submissions, and strict compliance with Department of Health guidelines. Even minor errors can lead to claim denials or prolonged payment delays. 

According to Services Australia, online claims processing can take up to seven days, and mailed claims can take up to 21 days. Rejected or audited claims often further delay reimbursements. 

Impact on Cash Flow: Such interruptions can drastically reduce cash flow, forcing providers to manage fixed operational expenses, including payroll, rent, and supplies, without timely cash inflows. This places substantial financial strain on their operations. 

Insurance

Accounts receivable in the insurance industry are closely tied to the claims process, regulatory compliance, and complex subrogation process—where insurers seek reimbursement from a third party responsible for a loss after compensating their client. While timely and accurate claim settlements are essential to business operations, delays are common and exacerbate A/R challenges. 

Impact on Cash Flow: These delays immobilise capital that could otherwise support new claims or strategic initiatives. Furthermore, the administrative burden involved in managing claims and subrogation activities can increase operational costs, reduce profitability, and place direct pressure on cash reserves. 

Manufacturing

The manufacturing sector faces a constant tightrope walk to balance the timing of cash outflows for raw materials, labour, and supplier costs against milestone-based cash inflows from clients. Extended production cycles and custom orders often widen gaps in cash flow timing. 

Impact on Cash Flow:  Misaligned inflows and outflows cause liquidity shortages, risking delayed supplier payments and disruption to ongoing operations. 

Retail & E-commerce

Retail and e-commerce businesses handle high volumes of low-value transactions, making reconciliation a complex and time-consuming task. Managing chargebacks, payment gateway issues, and thousands of daily transactions imposes heavy administrative burdens. For B2B retail, the challenge increases as collections spread over numerous smaller business customers. 

Impact on Cash Flow: Even minor errors or delays across numerous transactions can quickly lead to substantial and unexpected cash flow disruptions. Chargebacks and processing fees further erode profit margins, while the time and effort spent addressing these issues divert critical resources away from strategic business functions. 

How to Tackle A/R Challenges Head-On

While each sector’s A/R challenges differ, successful management is rooted in proactive, strategic approaches: 

Automate Your A/R Processes

One of the most effective strategies is to automate. Leveraging cloud-based accounting software enables prompt invoicing, automated payment reminders, and streamlined reconciliation. This reduces manual errors and collection delays, enhances transparency in receivables tracking, shortens DSO, and strengthens cash flow management. 

Strengthen Your Business Policies

Strong business policies are essential for effective A/R management. Clearly define your credit terms, conduct thorough assessments of new clients’ creditworthiness, and implement incentives – such as early payment discounts – or penalties, like interest on overdue accounts. Carefully tailored policies help minimise delinquency risk and further reduce DSO. 

Improve Customer Communication

A proactive collections approach yields better results than a reactive one. Instead of waiting for invoices to become overdue, you should establish a courteous and consistent follow-up schedule, including reminder emails before due dates. Building strong relationships with individual customers as well as business clients’ accounts payable teams makes it easier to identify and resolve potential issues early, improving the likelihood of timely payments. 

Outsource A/R to Professional Service Providers

For many Australian businesses, the complexity and time demands of A/R management can be overwhelming. Engaging professional service providers to handle some or all A/R functions – ranging from invoicing and reconciliation to debt recovery – offers several advantages: 

• Expertise and efficiency. A professional A/R management and debt recovery agency in Sydney leverages best practices and advanced tech to accelerate collections and reduce errors. 
• Cost-savings. Outsourcing can be more cost-effective than hiring, training, and retaining a dedicated in-house A/R team.
• Focus on core operations. Internal staff can prioritise revenue-generating tasks and strategic growth instead of concentrating on administrative burdens. 

Wrap Up

Accounts receivable challenges have profound effects on cash flow and overall business health, but differ greatly across sectors. From complex regulatory standards in banking to retention policies in construction, and claim delays in healthcare and insurance, each industry’s hurdles impact liquidity uniquely. But despite these differences, one principle remains consistent: proactive, customised, and strategic A/R management is imperative. 

A clear understanding of your industry’s A/R challenges can help you evaluate your business’s receivables processes and implement targeted strategies. This approach safeguards cash flow and operational stability and positions your business to thrive in an increasingly complex economic landscape. 

Leverage Expert A/R Management and Debt Recovery Services from Bluechip Collections

Bluechip Collections specialises in customised solutions designed specifically for Australian businesses. We combine forward-looking A/R management with professional debt recovery, all while prioritising preservation of your customer relationships.

With deep local knowledge and experience, our team can help you navigate complex accounts receivable challenges and position your business for sustained success in Australia’s competitive market. 

For more information on how we can support your A/R management and recovery efforts, contact us today at 1300 462 114 or complete our contact form. We are here to help you take control of your accounts receivable and strengthen your business’s financial health.