Australian companies are getting better at paying their bills, according to a recent study from Dun & Bradstreet (D&B).
D&B's most recent quarterly update on the payment experiences of Australian businesses found that many firms are paying bills faster than they were earlier in the year, taking an average of 53.4 days. This time frame is the fastest since 2007.
The number of invoices that were paid within a standard payment window of 30 days recorded strong growth. The number of bills paid on time has grown to 47.3 per cent, up from only 42.9 per cent in last quarter's survey.
Stephen Koukoulas, economic adviser to Dun & Bradstreet, suggested that interest rates are one reason behind these positive payment times.
"Low interest rates are helping with corporate cash flow, as we can see from the 87 per cent of firms that are paying their bills within 60 days," Mr Koukoulas said.
While this represents a rapid growth in companies that are paying bills on time, there are still a majority who are taking more than 30 days to pay a bill. There is also a considerable number (14 per cent) who still haven't paid an invoice after two months have passed.
Larger companies were also taking the longest time to pay their bills. While companies with 50 to 199 employees took less than 47 days, firms with more than 500 employees are taking more than 55.
For companies, this represents a significant drain on their resources. Not being able to receive payments on time can make it very hard for companies to remain profitable and maintain a strong cash flow.
One answer for companies is debtor financing. By freeing up cash that is currently held in invoices with stubborn clients, small businesses can plan ahead with much greater certainty.
By taking greater control over company cash flow, small firms can continue to grow, without having to chase up those who can't pay their bills on time.