In 2024, Australian SMEs are waiting an average of 38 days to be paid, up from around 30 days just a few years ago (Adams, 2024). That’s not just an annoyance; it’s a growing liability that restricts cash flow, delays growth and quietly chips away at profitability.
Offering trade credit is standard practice. But doing it without a clear, consistent strategy? That’s where problems begin. In this blog, we’ll break down what uncontrolled credit really looks like, the real costs hiding behind it and how to build a credit policy that protects your business and keeps your cash moving.
What Counts as “Uncontrolled” Credit?
It’s easy to assume credit terms are just part of doing business. But unless those terms are backed by a structured process, you're exposing your business to unnecessary risk.
Here’s what we mean by “uncontrolled”:
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Inconsistent terms: Some clients get 14 days, others 60 – no real rhyme or reason.
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No vetting process: You extend credit based on gut feel, not financial checks or trade history.
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No active monitoring: You send the invoice and hope for the best, without structured follow-up or review.
These gaps can seem small in isolation, but they compound quickly and they always show up in your cash flow.
4 Real Costs of Unplanned Credit
1. Cash Flow Disruption
Late payments hit your cash flow harder than most expect. Nearly half of all B2B invoices in Australia are paid late, with 1 in 10 still unpaid a month after their due date. That adds up. By December, Australian SMEs are projected to be short over $22 billion in unpaid invoices (Inside Small Business, 2023).
2. Admin Drain
Unpaid invoices create work. In fact, 31% of business owners report spending 21–30 hours each month chasing payments (Tenarys Law, 2024). That’s time that could be spent on growth, marketing or strategy – lost to follow-ups, reminder emails and reconciliations.
3. Bad Debt Write-Offs
Without proper credit assessments, you increase the risk of customers defaulting. Every bad debt chips away at your profit margins. Often, these losses aren’t visible until it’s too late to recover them.
4. Opportunity Cost
When working capital is tied up in receivables, it can’t be used to fund inventory, invest in equipment or pursue new business.
How to Build a Practical Credit Policy
Now that we’ve covered the costs, here’s how to take control of your credit process:
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Set Clear Terms
Choose a standard payment term (e.g. net-30) and stick to it. Make your terms visible in all quotes, invoices and contracts. Consistency reduces confusion and protects relationships. -
Vet New Customers
Run basic credit checks and request trade references where appropriate. Even a quick Google search or ASIC lookup can flag potential issues before they become real ones. -
Set Reasonable Credit Limits
Align limits to a customer’s turnover, industry profile and payment history. Don’t be afraid to start small and scale up as trust builds. -
Track Receivables Proactively
Use ageing reports and automated invoice reminders to keep tabs on your cash. Software can help, but even a simple spreadsheet is better than nothing. -
Reassess Regularly
Schedule quarterly reviews of payment behaviour. Adjust credit limits or terms for customers who consistently pay late or reward the ones who don’t.
Using Invoice Finance to Bridge the Gap
Sometimes, even with good credit practices, the delay between invoicing and payment creates pressure. That’s where invoice finance comes in.
Here’s how it works: you sell your outstanding invoices to a financier like Brunswick and receive up to 80% of the value upfront. Once your customer pays, you receive the remainder (minus a small fee).
It’s not a loan – there’s no new debt added to your balance sheet. Instead, you’re unlocking cash that’s already yours, just faster. This can:
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Smooth out seasonal dips
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Cover payroll or supplier payments
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Free up funds for new opportunities
At Brunswick, we tailor invoice finance solutions specifically for transport, logistics and professional-services SMEs – helping you take control of your working capital without jumping through hoops.
Final Thoughts
Trade credit is a useful tool, but only when it’s controlled. Without a plan, you’re not just risking late payments – you’re compromising cash flow, wasting admin time and leaving growth potential on the table.
Take action before late payments force your hand. Put a clear credit policy in place, monitor it regularly and consider how invoice finance could support your business in bridging cash flow gaps.
Ready to strengthen your credit strategy?
Book a quick, no-pressure consultation with a Brunswick specialist today.