Australian businesses are waiting longer to get paid than at any point in recent memory. The Payment Times Reporting Regulator's January 2026 update found the 95th percentile payment time rose to 64 days, up from 58 days, for invoices issued between 1 January and 30 June 2025 — and the average across all industries sat at 27.4 days (Payment Times Reporting Scheme, 2026). If you're still chasing overdue invoices with a spreadsheet and an awkward phone call, the gap between "invoiced" and "paid" is only getting wider.
Key Takeaways
- The 95th percentile payment time for Australian businesses rose to 64 days in the Payment Times Reporting Regulator's January 2026 update, up from 58 days the period before.
- A GoCardless survey of 500+ Australian SMEs found 42% of business owners feel uncomfortable chasing customers for late payments — AI accounts receivable tools remove that personal confrontation entirely.
- Payment disputes made up 42% of all requests for help lodged with the Australian Small Business and Family Enterprise Ombudsman in 2023-24, well above the 26% long-run average.
- Tools like Chaser, Satago, Upflow, and Paidnice integrate directly with Xero and MYOB to run tiered reminder sequences and stop automatically the moment an invoice is paid.
- Automated reminders must stay within the ACCC/ASIC Debt Collection Guideline (Regulatory Guide 96) — factual and professional, never threatening.
What Is AI Accounts Receivable Automation, and Why Does It Matter Now?
AI accounts receivable (AR) automation is software that connects to your accounting platform and automatically manages the process of reminding customers about unpaid invoices, escalating the ones that stay overdue, and stopping the moment payment lands. It replaces the manual job of tracking who owes what and personally following up.
This is specifically about chasing your own customers for money they owe you — not paying your suppliers on time, which is a separate (and equally real) problem covered by the Payment Times Reporting Scheme above. The two are connected: the same 64-day payment blowout that's squeezing small businesses as suppliers is also what makes it worth automating how you chase your own customers.
The mechanics are straightforward. The tool pulls unpaid invoice data from Xero or MYOB, then runs a pre-set sequence: a friendly nudge before the due date, a firmer follow-up once it's overdue, and an escalation trigger if the invoice passes a threshold you set — say, 30 or 60 days. Each reminder goes out automatically, in your name, without you having to remember which customer is on day 12 versus day 40.
That matters more this year specifically because the volume of overdue invoices a typical small business is sitting on has grown alongside the payment delays documented by the Regulator. Manual chasing doesn't scale past a handful of invoices a week — automated chasing does, and it does it with a consistency a busy owner rarely manages after the fifth follow-up call of the day. For a broader look at what to automate first, our guide to workflow automation quick wins covers how to prioritise which manual processes to hand off first, and our AI Productivity Stack guide goes deeper into how tools like this fit alongside the rest of your admin workflow.
This kind of gap — invoices that go unchased not because customers refuse to pay but because follow-up only happens when someone remembers — is a recurring pattern across the manual-to-automated transitions we cover in our case studies on moving from manual to automated processes. The fix is rarely the customer relationship; it's the consistency of the follow-up.
Why Late Payments Have Become a Bigger Problem for Australian Small Businesses
Late payments are getting worse in Australia for three compounding reasons: payment times are stretching out at large customers, payment disputes are rising, and most small business owners actively avoid the confrontation of chasing money they're owed — which means overdue invoices sit longer than they need to.
The Regulator's own data backs the first point. Beyond the 64-day figure at the slow end, the Fast Small Business Payer List — a new public register that updates daily, recognising large businesses that pay quickly — was launched specifically because so many large customers weren't (Payment Times Reporting Scheme, 2026). Naming fast payers publicly is a direct response to how much pressure slow ones put on their small suppliers.
The dispute side is just as telling. The Australian Small Business and Family Enterprise Ombudsman found payment disputes made up 42% of all requests for help it received in 2023-24 — well above the 26% average recorded between 2016 and 2024 — out of 6,254 total requests, itself a 10% increase on the year before. That's not a handful of businesses having a bad quarter; it's a structural shift in how often payment disagreements are serious enough to need a formal dispute process.
Then there's the human factor, which is arguably the bigger reason invoices go unchased for weeks. A GoCardless survey of more than 500 Australian SMEs found 42% of business owners feel uncomfortable pursuing customers for late payments. The same survey found 27% of SMEs estimated losing up to $6,000 a year to late payments, and more than a third had been forced onto credit cards or loans just to bridge the resulting cash flow gap.
"We've seen the Payment Times Reporting Regulator's findings and while positive reinforcement is very nice, negative publicity for the biggest offenders may be what it takes to get real change." — Ian Boyd, General Manager ANZ, GoCardless
Pro tip
Common mistake: Treating a slow-paying customer the same as a bad debt. Most late payments are administrative, not malicious — a busy accounts team, a missed email, a mismatched PO number. Escalating too fast damages a relationship that a well-timed reminder would have fixed.
That discomfort is exactly the gap AI accounts receivable tools close. They don't remove the need to follow up — they remove the need for you to be the one making an awkward call, which is often the actual reason an invoice sits unchased for an extra fortnight.
How AI-Powered Payment Chasing Tools Actually Work
AI accounts receivable tools work by syncing with your accounting software, running a tiered sequence of automated reminders that get firmer the longer an invoice sits overdue, and using payment history to flag which customers are likely to pay late — then stopping every reminder automatically the second the invoice is marked paid.
The sequence itself is the core feature. A typical setup sends a friendly reminder a few days before the due date, a neutral follow-up on the day it becomes overdue, and a firmer (but still factual) message at set intervals after that — 7 days, 14 days, 30 days. You set the thresholds; the tool handles the timing and the sending.
Payment behaviour prediction is what separates these tools from a basic recurring-email rule in Xero. By analysing a customer's payment history, the software can flag accounts that consistently pay a week late and adjust the reminder schedule accordingly, or surface a risk score before you extend further credit. Two-way sync with your accounting platform means the moment a payment is reconciled, every pending reminder for that invoice stops — so you never send a chase email for a bill that's already settled, which is one of the fastest ways to damage a customer relationship.
Pro tip
Pro tip: Set your escalation threshold at the point where a phone call from a real person, not another automated email, has the best chance of resolving it — for most small businesses that's around the 30-day mark. Automate everything before that line; hand off everything after it.
Several tools built specifically for Xero and MYOB users cover this category:
| Tool | Core function | Accounting integration |
|---|---|---|
| Chaser | Multi-channel automated reminders (email, SMS, phone, letter) with payment-risk prediction | Xero |
| Satago | Automated credit control, reminders, and customer risk/credit scoring | Xero, QuickBooks, Sage |
| Upflow | Multi-step reminder sequences tailored by invoice age and customer risk profile | Xero, QuickBooks, NetSuite |
| Paidnice | Applies payment terms automatically — reminders, statements, and escalation rules | Xero, QuickBooks |
None of these replace your accounting software — they sit on top of it, reading invoice data and handling the communication layer your accounting platform was never built to manage. Our piece on invoice processing automation covers the adjacent problem of getting invoices out the door faster in the first place, and accounting automation for small business covers the broader admin layer these tools sit within. For a deeper look at how these platforms fit into a wider AI toolkit, AI accounting automation, accounts receivable automation, and AI invoice payment automation on our sister sites go further into the mechanics.
Rolling one of these tools out well is a small, contained project — usually a candidate for our AI workflow automation work rather than a full platform rebuild, since it's a case of connecting an existing tool to your accounting data rather than building anything from scratch.
Getting the Tone Right: Compliance and Keeping Good Customers
Automated payment chasing is legal in Australia provided every message stays factual, professional, and free of anything resembling a threat — the boundary is set nationally by the ACCC/ASIC Debt Collection Guideline (Regulatory Guide 96) under the Competition and Consumer Act 2010.
Regulatory Guide 96 prohibits harassment, coercion, misleading conduct, and any document designed to look like a court notice when it isn't. That applies whether a human or an automated tool sends the message. In practice, this means every template in your sequence needs to state the facts — invoice number, amount, due date — without implying legal consequences that aren't actually coming next.
There's also a real distinction between chasing an unpaid invoice and referring a debt to a collector. AI accounts receivable tools operate almost entirely in the first category: reminders, statements, and polite escalation. The moment a debt moves to a collections agency or legal action, that's a decision a human needs to make deliberately, not something a tool should trigger on autopilot.
Getting the tiering right protects the relationship as much as the compliance position. Keep the first two or three touches automated and genuinely friendly — most overdue invoices are an oversight, not a refusal to pay. Reserve firmer language for invoices well past due, and build in a rule that a real person reviews the account before anything moves to formal demand or collections. For amounts small enough that the cost of chasing exceeds the invoice value, writing it off as a bad debt is often the more sensible call than escalating.
Pro tip
Common mistake: Using a generic "final notice" template pulled from a template library without checking it against RG 96. Language implying legal action that isn't actually planned, or formatting designed to resemble a court document, is exactly what the guideline prohibits — regardless of whether a person or a tool sent it.
This is the kind of implementation detail — where to set the automation boundary, what a human needs to review, how the tiering should escalate — that's easy to get wrong on a first pass, and it's worth getting right before you switch anything on. For a broader look at weighing the cost and payoff of a change like this, see our piece on ROI for AI implementation in service businesses.
Late Payment Chasing: Manual vs AI-Automated
| Factor | Manual chasing | AI-automated chasing |
|---|---|---|
| Time per invoice | 10-20 minutes of tracking, drafting, follow-up | Set up once; near-zero ongoing time |
| Consistency | Depends on how busy you are that week | Every invoice follows the same sequence |
| Emotional friction | High — the owner makes the awkward call | Removed — the system sends the first several reminders |
| Stops on payment | Manual check required | Automatic via two-way accounting sync |
| Compliance risk | Depends on the individual's wording each time | Consistent, reviewable templates |
Frequently Asked Questions
AI accounts receivable automation is software that connects to Xero or MYOB and automatically sends reminders for unpaid invoices, escalating firmer follow-ups the longer an invoice stays overdue, then stopping the moment it's paid.
The Payment Times Reporting Regulator's January 2026 update found the 95th percentile payment time was 64 days, up from 58 days the previous period, with an average of 27.4 days across all industries.
Yes, provided the communications stay factual and non-harassing. The ACCC/ASIC Debt Collection Guideline (Regulatory Guide 96) governs this conduct nationally and prohibits threatening language or documents designed to resemble court notices.
Chaser, Satago, Upflow, and Paidnice all integrate directly with Xero, with several also supporting MYOB, QuickBooks, or NetSuite, to automate reminder sequences and credit control.
A GoCardless survey of 500+ Australian SMEs found 42% of business owners feel uncomfortable pursuing customers for late payments, which is one of the main reasons invoices sit unchased for longer than necessary.
Most small businesses set the handoff around 30 days overdue, or once an automated sequence has run its full course without payment — at that point a phone call from a person has a better chance of resolving it than another automated email.
Chasing an invoice means sending reminders and statements for a bill that's overdue; debt collection involves referring the matter to a specialist collector or legal process, which is a separate decision that shouldn't be automated.
Where to Start This Week
Pick your five most chronically late-paying customers and manually map out how long each invoice actually took to get paid over the last six months — most owners are surprised by the real average once it's written down instead of estimated. That number is your baseline for whether an AR automation tool is worth the subscription.
If chasing genuinely makes you uncomfortable enough that invoices sit for an extra week or two before you follow up, that discomfort has a dollar cost — the GoCardless data above puts it at up to $6,000 a year for a meaningful share of Australian SMEs. A tool that costs $50-100 a month to remove that friction usually pays for itself inside the first invoice it recovers early. If you're not sure which of these tools fits your invoice volume and accounting setup, that's exactly the kind of assessment we help clients work through at GrowthGear.
Sources & References
- Payment Times Reporting Scheme — Regulator's Update, January 2026 — 95th percentile payment time rose to 64 days from 58 days; Fast Small Business Payer List launched (2026)
- Accountants Daily — Small suppliers being squeezed by slow payments — GoCardless survey of 500+ Australian SMEs; Ian Boyd quote (2026)
- Accountants Daily — SME disputes remain elevated: ASBFEO — payment disputes at 42% of ASBFEO requests for help, 2023-24 (2026)
- ASIC — Regulatory Guide 96: Debt collection guideline for collectors and creditors — national conduct standards for debt collection communications
