Large Businesses still have the slowest payment times despite record low in 12 months to June 2018
In this article we have decided to take a closer look at the latest 2018 September quarter analysis conducted by illion in regards to Australian late payments, and highlight some of the key points from their analysis off the back of Kate Carnell’s (Australian Small Business and Family Enterprise Ombudsman) determined effort to raise late payments as a key issue impacting Australian small businesses.
Late payment hits record low in 12 months to June 2018
Based on the September quarter analysis, it has been identified that businesses are paying their invoice obligations in record time. It highlights that the average time taken to make a late payment to a business was at 10.4 days, which equates to an extraordinary 17.7% decrease YoY (12.6 Days in September 2017).
• Late payment times lowest on record
• ACT records annual drop of 23.1%
• Retail worst sector at 13.5 days
• Prompt payments rise to 72%
Late Payments by Region
The ACT continues to have the highest level of late payments across Australia, despite seeing the largest year-on-year improvement of 23.1% to 11.8 Days – compared to 15.4 Days in September 2017. Tasmania recorded the fastest payment times at 8 Days which resulted in a 16.4% drop and has seen its average payment time decrease by 62.6% over the last five years. This significant improvement has been contributed to “strong economic growth, a sharp lift in business activity and significantly lower unemployment” accordingly to Stephen Koukoulas, illion’s Economic Advisor.
Year-on-year by Region
• New South Wales: 10.5 Days (-19.6%)
• Victoria: 10.4 Days (-15.4%)
• Queensland: 10.1 Days (-16.8%)
• Australian Capital Territory: 11.8 Days (-23.1%)
• Tasmania: 8.0 Days (-16.4%)
• South Australia: 10.3 Days (-13.5%)
• Western Australia: 11.0 Days (-22%)
• Northern Territory: 10.8 Days (-9.8%)
Late Payments by Size of Business
As highlighted by the Australian Small Business and Family Enterprise Ombudsman and past analysis, the difference in payment times between large and small businesses remains indicative of the power disparity that exists. And looking at the latest report, this trend still continues – seeing larger entities remaining well behind smaller enterprises.
At the highest level, we are seeing a difference of up to 6.7 days, with average payment times for organisations with greater than 500 employees sitting at 14.6 days, whilst entities with between 6-19 employees currently averaging only 8 days to settle their invoices.
With little change in trend over the years which highlights that late payments are generally much higher in large companies, it’s important for businesses to make sure they have the right systems and processes in place to help minimise the impact on your business’s cash flow. Whether this integrating accounting software such as Xero or MYOB to help streamline and automate invoicing and reminders or offering more convenient or flexible payment options, there’s a number of areas that you can review to help you get paid faster.
Are you struggling to get paid on time?
Staying on top of your cash flow is very important in ensuring the growth and success of your business. It’s important to look out for your own business’s interest first and foremost, so if you feel you have exhausted all possible avenues to recovering unpaid invoices, it might be time to speak to a debt collection agency.
A professional collection company specialises in recovering bad debt from low payers, and more importantly, are able to do so whilst maintaining the integrity of your current business relationships. This leaves you to focus on growing your business, while leaving the specialists do what they are good at – collecting debt.
If you would like an obligation free debt assessment, please fill out the free web appraisal form below or call us on 1300 136 271 today!.
About Marshall Freeman
Marshall Freeman is Australia’s leading debt collection and recovery specialists. Through servicing over 20,000 businesses throughout Australia for over 15 years, we have gained a reputation as an industry leader in providing financial information, knowledge and education for small and medium sized enterprises.