Small businesses are receiving payments from clients a month late on average - that's 18 days longer than last year. Make sure your business's cash flow isn't adversely impacted this holiday season.
The blow-out in payment times is having a "devastating impact" on small businesses across the country, warns the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).
In October, small businesses were paid 31 days late on average, compared to 13 days late in October 2019, reveals CreditorWatch data published in a recent report.
ASBFEO Kate Carnell says the delay in payments is hitting businesses already under strain due to COVID-19.
"It's more important than ever to remember that although Small Business Counts is a statistical report, behind every number is a person," she says.
"Small businesses are the engine room of the Australian economy, but they are also hard-working people who have had to overcome huge obstacles in 2020."
What businesses are worst impacted?
The transport, postal and warehousing sector has been hit hardest by the blowout in payment times, with those businesses receiving payments an average of 90 days late, compared to 9 days late in October 2019.
Other sectors with average payment delays of over 30 days include:
- financial and insurance services
- professional, scientific and technical services
- construction
- rental, hiring and real estate services
- healthcare and social assistance businesses, and
- many other service-based businesses.
It's doubtful these figures will improve over the next couple of months, with the summer holidays a notorious period for late payments.
So if you haven't started invoicing clients yet, you should consider doing so now - especially those who have a history of being tardy.
Silver linings in 2020
It's worth noting that the ASBFEO report isn't all bad news.
It also highlights the resilience and agility of Australian small businesses.
It shows 40% of small businesses have pivoted their operations to adapt to the rapidly changing conditions faced in 2020 - whether that be due to the summer bushfires or COVID-19.
"It's been inspiring to hear the stories of small businesses that made a decade's worth of change in a matter of days and managed to keep their business afloat," says Ms Carnell.
Funding options are available
If your business is struggling with cash flow issues due to late payments from clients, or a recent change in direction, then please get in touch sooner rather than later.
We can run you through some financing solutions that may be available to help your business make the transition from 2020 (good riddance!) to 2021 (here we come!).
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