Clients who take forever to pay their invoices are a constant thorn in the side of Australian small business owners. Unfortunately, a new report from Dun & Bradstreet reveals that companies down under are waiting longer than ever to receive payments from tardy customers.
The financial services company releases a quarterly report - the Trade Payments Analysis - that looks at, among other measures, how long businesses in Australia wait on average to receive invoice payments. The latest report indicates that during the first quarter of 2014, business-to-business payments in Australia took an average of 56 days to be settled.
This is three whole days slower than in the previous quarter and the lowest rate in three years, according to Dun & Bradstreet. The firm pointed out that while payments in the first quarter are often delayed due to the slowdown in business over the summer holidays, this level of tardiness is unusual and hasn't been seen since 2011.
Adam Siddique, head of group development-Dun & Bradstreet, said these tardy invoice payments could have flow-on effects down the line.
"While businesses are upbeat about increasing their sales, these latest findings suggest they are experiencing difficulty managing their finances and paying their expenses on time," he said.
"When bills are paid late it interrupts the cash flow that businesses need to cover their own operating costs, which in turn delays how quickly they can pay their suppliers - and so the cycle continues."
Unsurprisingly, another report released by Dun & Bradstreet - the Business Expectations Survey - reveals that almost a third (31 per cent) of Australian businesses believe cash flow will be the issue "most likely to influence business operations in the next quarter", putting it ahead of other concerns including wages and salaries and interest rates.
No matter the time of year, it's important not to be bogged down by a lethargic cash flow, even if the problem stems from your customers and not from you. Taking advantage of alternative funding methods such as debtor finance can give your business the cash flow boost it needs.