Almost one in 10 firms are receiving payments more than 60 days past the invoice terms, new figures show, as late payments continue to wipe out otherwise sustainable businesses.
Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), welcomed figures from Dun & Bradstreet’s Late Payments in Australia report that showed a 4.6 per cent fall in late payments in the second quarter of 2017, and a sharp rise in on-time payments.
However, late payments remain an ongoing concern, given that less than two-thirds (63.8 per cent) of Australian businesses are paying their invoices promptly.
Of even greater concern is that just 12 per cent of ASX-listed companies – which comprise most of the nation’s biggest firms – are paying their bills on time, compared to 34 per cent of non-listed businesses.
“This is very disappointing, as public companies should be leading by example,” Ms Carnell said.
“Cash flow is king to small business; late payments can be the difference between success and insolvency.”
She added: “Overseas jurisdictions have demonstrated that faster payments through supply chains will free up cash flow and stimulate investment, jobs and growth.”
The average term of late payments currently stands at 14.6 days, according to Dun & Bradstreet. Sadly, nearly one in 10 firms (9.6 per cent) are receiving payment more than 60 days beyond the terms of their invoices.
Of particular note is the finding that it is not start-ups which are most vulnerable to the effects of late payments.
According to the report, businesses that have been operating for between two and five years face the greatest risks from overdue invoices.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.