Payment Terms hindering small business
You may have seen recent press reports on the issue of payment terms and how small businesses are struggling with clients not paying on time.
The issue was highlighted in this year’s report into Payment Times and Practices by the Australian Small Business and Family Enterprise Ombudsman.
The report highlighted the fact that payments to businesses in Australia are on average 26.4 days overdue. This is one of the worst rates in the developed world, compared to the US (7.1 days), France (6.1 days), and the UK (5.85 days). Indeed, average payments to businesses in Japan are 6.5 days early!
Late payments are slowing down the flow of cash in the economy and many business owners are having to wait months for their invoices to be processed. The associated costs and stress can be a significant factor contributing to business failure.
The report made numerous recommendations, including for government to take the lead in implementing a 15-day payment term by July 2018.
The issue is starting to resonate with some big businesses. For instance, Rio Tinto recently adjusted its payment terms to suppliers down from 45 days to 30.
The chamber would be interested in hearing members’ feedback on the enquiry report recommendations as well as your own stories on how the issue of late payments has impacted your business.