Cash flow & accounts receivable for Australian SMBs

Cash flow kills more Australian SMBs than profitability does. This pillar covers the AR side of the equation: what good looks like, what bad looks like, and when external recovery actually helps.

The headline metric: DSO

Days Sales Outstanding is the AR metric to live by. Calculation: DSO = (Accounts Receivable / Total Credit Sales) × Number of Days.

Australian SMB benchmarks (rough, by sector):

  • Retail / hospitality: 5–15 days (mostly card-paid).
  • Trades / construction: 30–60 days (subject to Security of Payment Act rhythms).
  • B2B services: 30–45 days.
  • Manufacturing / wholesale: 45–75 days.

If your DSO is materially above sector benchmark, you have either an invoicing-discipline problem or a recovery-discipline problem. Often both.

The chase that doesn't burn customers

The right cadence for B2B AR:

  • Day -7 (before due): friendly reminder.
  • Day +3 (after due): polite follow-up.
  • Day +14: firmer notice with payment options.
  • Day +30: formal demand or escalation to recovery.

Phone calls escalate only after written attempts. Aggressive chase-up at day +5 destroys customer relationships and rarely speeds payment.

When to escalate to external recovery

Some signals that an account has crossed the line:

  • No response to two written follow-ups.
  • 60+ days past due with no plan agreed.
  • Customer ignoring direct contact.
  • Disputes raised but never substantiated.

External recovery doesn't have to mean nuclear. Modern platforms recover with debtor portals and automated outreach — the same customer who ignored your AP follow-up will often settle through a portal in 2 minutes. See how recovery actually works in 2025.