Late Payers Are Still a Problem For Small Business
Back in July we wrote an article called “Late Payers in the Australian Market.” It was about big businesses delaying their payments to smaller business, effectively damaging their cash flow and making it very difficult to remain financially viable.
Recently an article in the Australian Financial Review addressed the same problem, referring to research which found that Australia has some of the latest payers in the world. Our businesses wait on average an extra 26 days to be paid. That’s almost one whole month spent waiting on funds to arrive.
The article quotes figures from the office of the Small Business and Family Enterprise Ombudsman which show that “90 per cent of small business failures are due to poor cashflow, small businesses are owed $26 million in unpaid invoices and the average owed for each small business at any one time is $13,200.”
“In addition, small business owners spend an average 12 days a year chasing unpaid invoices and 27 per cent of small businesses have been forced to take out loans to pay their suppliers and wages.”
Kate Carnell, current Ombudsman, wants to see a more equitable arrangement in the marketplace. Her office, in association with the Council of Small Business of Australia and the Australian Institute of Credit Management, has launched an inquiry into the practice of corporations setting unfair payment terms for small business. It will study how the practice came to exist and what impact it has had on small businesses, and try to find a solution to the situation.
The team at Invoice Money applauds the decision to investigate the late payment process and look for a better solution. Sadly, this will take some time to do and in the meantime, some small businesses might lose their fight to stay afloat.
If your small business is struggling with cash flow, or you have small clients needing assistance, make sure you speak with us. Invoice finance will give you money against your outstanding invoices when you need it.