While an inquiry underway is looking to “name and shame” large companies that are bleeding SMEs with poor payment terms, new research suggests that, overall, payment times have never been better.
The September 2018 quarter saw late payments hit a new low on illion’s Late Payments analysis, with the average overdue invoice hitting 10.4 days.
The same index revealed an average of 11 days for the previous quarter. By comparison, the September quarter last year saw late payments averaging 12.6 days.
Overall, prompt payments now account for 72 per cent of all payments from these businesses, according to illion.
The research firm’s CEO, Simon Bligh, attributed the ongoing improvements in payment times to the work of the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).
“[The ASBFEO] has increased awareness of late payments as a key issue impacting small businesses across Australia,” Mr Bligh said.
“It appears to be paying off, as late payment times have decreased across all industries and sectors.”
Stephen Koukoulas, illion’s economic adviser, said that the improving payment times are also an indicator of a healthy economy.
“Late payments are an indicator of the financial health of the business sector, with low payment times associated with sound conditions,” Mr Koukoulas said.
Retail remained the slowest to pay SME invoices, with an average of 13.5 days, closely followed by the utilities sector (on 13.3 days).
At the other end of the scale, the forestry sector is the fastest to pay its bills, with average late payments of 5.5 days.
The ASBFEO’s inquiry into payment times is due to report its findings shortly.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.