If you sell on terms, you’re effectively a lender. In 2025, that “lending” is getting riskier: more invoices are going overdue, Days Sales Outstanding (DSO) is stretching, and the manual cost of chasing payments is quietly eroding margin.

This piece breaks down why late payments are surging, what the latest data shows across Australia, New Zealand and the U.S., and how wholesalers are using PencilPay to automate credit control before invoices turn into problems.

The surge in late payments: what changed?

Competitive pressure → looser terms. To win orders in a tougher demand environment, many suppliers extended or relaxed terms in 2024–2025. That traded short-term revenue for longer cash cycles and higher credit risk. CreditorWatch’s Business Risk Index tracked a run-up in B2B payment defaults through 2024 and into early 2025, tightly linked with elevated insolvencies, especially in construction and hospitality. The AustralianCreditorWatch

Retailers under strain. Lower discretionary spend and higher input costs have squeezed downstream customers, pushing them to “fund” operations by paying suppliers late. In New Zealand, Xero estimated late payments cost small businesses NZ$827m in 2023, up 81% since 2021. Xero

Rising costs and rates. Higher financing costs make trade credit more attractive than bank debt for buyers—so buyers lean harder on supplier terms. Atradius’ 2024/2025 surveys show Australian businesses increased the use of trade credit as borrowing capacity tightened. Atradius

Policy/reporting pressure. Australia’s Payment Times Reporting (PTR) regime continues to mature, with new guidance landing in March 2025—meaning bigger customers face more scrutiny on how quickly they pay SMEs. That’s good for transparency, but doesn’t remove the on-the-ground need to control credit risk at the supplier level. KPMG

The numbers: how bad is “overdue” in 2025?

• Australia: Atradius’ 2025 Payment Practices Barometer reports 52% of B2B invoice value overdue and 11% written off as bad debt; only 37% paid on time. That’s squarely in the “50–60% late” band wholesalers feel day-to-day. Atradius
  Complementary indicators show stress: CreditorWatch flagged record or near-record payment defaults through late 2024, with sector hot spots in construction and hospitality. CreditorWatchaicm.com.au
  
  
• United States: Atradius’ 2024 U.S. survey found about half of B2B invoices overdue, with bad debts averaging ~8% of credit sales—a reminder that late payment pressure is global, not just regional. Atradius
  
  
• New Zealand: Beyond the NZ$827m annual drag from late payments, the working-capital story is similar: stretched cash cycles push suppliers to spend more time (and headcount) on chasing, reconciliation, and exceptions. Xero
  
  

Even general small-business data points the same way: Xero notes invoices are paid ~6 days late on average—and averages hide the tail risk that really hurts wholesalers. Xero

The hidden cost of chasing (and why it compounds)

Late payments don’t just delay cash—they trigger a cascade of costs:

1. Labour drag: manual credit apps, setting terms, reminders, calls, promised-to-pay tracking, split payments, and reconciling part-pays.
   
   
2. Risk drift: reps override terms to save a sale; finance extends credit to protect DSO optics; customers learn that “terms are flexible.”
   
   
3. Margin leakage: bad debts crystallise, early-pay discounts are missed by you (because you’re waiting for them), and re-stock or production plans slip.
   
   

With half of invoice value running late in Australia and the U.S., even a 2–3 hour per-day admin lift per AR staffer becomes a real, recurring tax on margin. AtradiusAtradius

What leading wholesalers are changing (and how PencilPay helps)

The fix isn’t “chase harder.” It’s design out late-payment risk before the invoice is born.

1) Digitise credit applications and approvals

Problem: Paper/PDF apps, trade refs, and gut-feel decisions are slow and inconsistent.
Do instead with PencilPay: Host a branded digital credit application that auto-validates details and captures the customer’s preferred payment method up front (card, bank debit). Approval rules become policy—not email threads—so sales can move fast without opening the floodgates.

2) Set smarter terms by customer risk

Problem: One-size-fits-all “Net 30/60” inflates DSO and concentrates risk.
Do instead: Use PencilPay to segment terms:

• Up-front deposit (e.g., 20–50%) for new or lower-score customers
  
• Progress/part-payment milestones for large orders
  
• Tighter limits that automatically expand after clean payment history
  
  

3) Secure payment details before fulfilment

Problem: Unsecured orders turn into unsecured receivables.
Do instead: PencilPay securely vaults card/bank details at onboarding, so you can auto-bill on dispatch (or on due date) and offer instalment plans without new paperwork. That flips collections from “manual chase” to “authorised pull.”

4) Automate collections and escalations

Problem: Reminders and call cadences slip; exceptions get lost in inboxes.
Do instead: PencilPay triggers branded reminders, retries failed payments, and escalates to instalment offers or holds future orders until payment is resolved—without your team re-keying anything.

5) Tighten the order-to-cash loop via integrations

Problem: Reconciliation and exceptions eat hours.
Do instead: With accounting/ERP integrations (e.g., MYOB, Cin7 Core), PencilPay links invoices, payments, and customer terms so your ledger stays clean and your team focuses on exceptions that matter—not routine follow-ups. CreditorWatch

Playbooks you can deploy this quarter

• New-customer policy: no account is opened without a completed digital credit app and a stored payment method.
  
• Risk-based terms matrix: align deposit %, credit limit, and auto-billing rules to risk tier; review automatically after 3 on-time payments.
  
• Auto-bill on dispatch: for stocked lines, collect on ship; for made-to-order, collect deposit + milestone + balance.
  
• Promise-to-pay automation: convert “we’ll pay Friday” into an authorised future debit in PencilPay.
  
• Stop-supply guardrails: auto-hold new orders for accounts >X days overdue unless an instalment plan is accepted.
  
  

Expected impact: moving even 15–20% of your invoice volume from “manual collect” to secured, scheduled payments typically shortens cash conversion, reduces ageing buckets, and cuts chasing hours. With half of invoice value overdue in AU/US baselines, this isn’t incremental, it’s transformative.

Bottom line

Late payments are no longer an occasional nuisance—they’re a structural cash-flow risk. The data shows it clearly: ~50%+ of B2B invoice value is overdue across major markets in 2025, with bad-debt write-offs still too high. The answer is not longer email chains—it’s front-loading credit control with digital onboarding, secured payment methods, risk-based terms, and automated collections.

That’s exactly what PencilPay was built for.