You’ve probably felt it too.

The rent’s gone up. Groceries cost more. Power bills have doubled. Even your morning coffee seems to be testing your credit limit.

Australia’s cost of living crisis isn’t just hitting households – it’s hitting businesses hard. And one of the first signs? Customers start paying late.

Whether you deal with other businesses or sell direct to consumers, you’ve likely noticed a change: more excuses, longer delays, and a growing sense that people just don’t have the cash flow they once did.

At JMA Credit Control, we’ve been helping businesses chase payments for over 50 years – and right now, we’re seeing a clear trend: late payments are on the rise, even from clients who were once as reliable as clockwork.

So, what can you do?

In this article, we’ll break down what the cost-of-living crisis means for your bottom line, how to spot the early warning signs of payment problems, and what steps you can take to protect your cash flow without damaging your client relationships.

The real – world impact of rising costs on your customers

It’s not just individuals who are tightening their belts – businesses are feeling the pinch too. Higher interest rates, rising wages, increased supplier costs, and general economic uncertainty all create a ripple effect that impacts payment behaviour.

Here’s what that looks like on the ground:

• The small retailer who’s now prioritising stock over bills
• The service – based business putting off paying suppliers to cover payroll
• The tradesperson whose own clients haven’t paid, leaving them unable to pay you

Even long – term, trustworthy clients might start missing payment deadlines – not because they want to, but because they’re juggling a dozen financial fires and yours just isn’t the hottest one.

In many cases, it’s not personal – it’s survival.

But that doesn’t mean you should just cop it on the chin. You still need to pay your own staff, suppliers, and rent, and late payments can put your entire business at risk.

How it affects your business (even if you’re staying afloat)

Late payments don’t always hit like a lightning strike – they creep in.

At first, it’s one invoice that arrives a week late. Then it’s a client asking for “just a little more time.” Before long, your accounts receivable is a mess of follow – up emails, half – paid invoices, and broken promises.

Here’s what that really means for your business:

Cash flow headaches

You might have plenty of work on the books, but without money in the bank, covering day-to-day expenses becomes a struggle. That can stall your ability to pay staff, order stock, or invest in growth.

Wasted time

Chasing overdue invoices isn’t just annoying – it’s expensive. Every hour spent writing follow – up emails or calling clients is time you’re not spending on new work, marketing, or building your business.

Flow – on pressure

When your customers don’t pay you, you might fall behind on your own bills. That strains your reputation with suppliers and can push you into uncomfortable territory with your own creditors.

Stress and uncertainty

There’s also the emotional toll. Constantly wondering whether you’ll be paid on time – or at all – can wear you down. And let’s be honest: being the “bad guy” chasing money isn’t what you signed up for when you started your business.

Even if your business is technically still “doing okay,” a pile – up of late payments can quietly undermine your financial stability and peace of mind.

Red flags to watch for during an economic downturn

When the economy tightens, even good customers can start slipping. Some will be upfront and honest. Others… not so much.

Here are a few signs that a client might be headed for payment trouble:

Consistent delays

If someone who used to pay like clockwork is now always “a few days late,” that’s not a blip – it’s a pattern. And patterns matter.

Excuses that keep changing

“We’re waiting on a big client to pay us.”
“Our accounts person is on leave.”
“The system was down.”
One – off excuses are normal. A new one every time? That’s a problem.

Partial payments

Some customers will pay just enough to keep you hopeful – without clearing the balance. It might feel like progress, but it’s often just stalling.

Radio silence

You’ve followed up. Politely. Professionally. More than once. And now… nothing. Unreturned calls or ignored emails usually mean one of two things: the client can’t pay – or doesn’t intend to.

Price pushback

If a client suddenly wants to renegotiate previously agreed pricing or payment terms, they may be under financial pressure. It’s not always a red flag – but paired with other behaviours, it could be a sign of deeper trouble.

Spotting these signs early gives you time to act – before the debt becomes uncollectable.

Practical steps to protect your business (without burning bridges)

You don’t have to choose between being paid and keeping good client relationships. With the right systems in place, you can do both. Here’s how to strengthen your position without creating unnecessary tension.

1. Tighten your payment terms

Now’s the time to review your terms and make sure they actually protect you. That means:

• Setting clear due dates (not “due upon receipt” or “net 30” – be specific)
• Including consequences for late payments, such as interest or admin fees
• Outlining acceptable payment methods
• Confirming your terms in writing before starting any work or supplying goods

If you’re worried about scaring clients off, remember – professional clients respect clear boundaries. The ones who push back are usually the ones most likely to pay late anyway.

2. Offer payment flexibility (but stay in control)

Economic pressure means some clients genuinely can’t pay large amounts upfront. Offering structured payment plans can help – but only if you stay in the driver’s seat.

Set clear rules:

• A written agreement outlining payment dates and amounts
• A set timeframe (not “we’ll pay what we can, when we can”)
• Consequences for defaulting on the plan
• Optional direct debit to reduce the risk of missed payments

Flexibility should be a solution, not an invitation to delay payment indefinitely.

3. Automate reminders and follow – ups

Relying on memory or sticky notes isn’t good enough when cash flow is tight. Use invoicing software to:

• Send invoices immediately
• Automate reminder emails before and after the due date
• Alert you when invoices go overdue

You’ll save time, reduce awkward conversations, and keep your cash flow moving.

4. Follow a structured escalation process

If a client misses payment despite reminders, don’t leave it open – ended. Use a consistent three – step approach:

• Step 1: Friendly reminder – A professional nudge a few days before or after the due date
• Step 2: Firm follow – up – A direct message explaining the urgency and outlining consequences
• Step 3: Letter of demand – A formal notice that you’re prepared to escalate if payment isn’t made

Consistency is key. Clients should know you take payment seriously – without needing to raise your voice.

When it’s time to bring in the professionals

You’ve set clear terms. You’ve followed up. Maybe you’ve even offered a payment plan.

But the client still hasn’t paid – and now it’s starting to hurt your business.

This is the point where many business owners hesitate, not wanting to “ruin the relationship” or seem too aggressive. But here’s the reality: there’s nothing unprofessional about expecting to be paid for the work you’ve done.

If you’ve exhausted your internal efforts and still haven’t been paid, it’s time to get help.

A professional debt collection agency like JMA Credit Control can:

• Take over communication with late payers, removing the stress from your plate
• Send formal letters of demand that get attention
• Negotiate repayment without damaging your reputation
• Begin legal escalation if necessary
• Operate on a “no recovery, no commission” basis – so you only pay if we recover your debt

Often, just the involvement of a third party is enough to prompt payment. And when it isn’t, we’re equipped to pursue the debt through the right legal channels – saving you time, energy, and frustration.

Final thoughts: protect your business, even in tough times

There’s no doubt the current economic climate is difficult. People are struggling. Businesses are under pressure. And while it’s important to have empathy, it’s just as important to protect your livelihood.

The good news? You don’t have to do it alone.

With clear payment terms, smart systems, and a strong debt recovery partner on your side, you can manage risk, reduce stress, and keep your business moving forward – no matter what the economy throws your way.

If you’re dealing with chronic late payments or worried about the impact of the cost of living crisis on your cash flow, we’re here to help.

JMA Credit Control has been helping Australian businesses recover debts for over 50 years – ethically, efficiently, and with real results.
Contact us today for a no – obligation chat about how we can help you get paid – without the stress.