How long do you have to wait for clients to pay invoices? It could be weeks, depending on your credit terms, or even months. Research from Dun and Bradstreet Australia for Q4 2016 shows that payment times vary from state to state, so where you base your business could change how long it takes you to receive the money you're owed.
If you're noticing that some aspects of your business suffer when clients pay their invoices late, you need to find a solution to keep your operations running smoothly. Debtor finance from Earlypay is that solution. We can take your unpaid invoices and provide you up to 80 per cent of the total, so you can keep your business ticking along. We can handle the debt collection for you, so all you have to focus on is the relationship with your client.
What state is the worst for late payments?
We can take your unpaid invoices and provide you up to 80 per cent of the total, so you can keep your business ticking along.
The ACT is the slowest at paying invoices, with a state-wide average of 19 days past the due date for all business invoices, according to a Dun and Bradstreet report from February 28. Tasmania is at the other end of the scale, averaging only 11.7 days past the due date before invoices are paid. Across the whole country, the average late payment time is 14.4 days.
What this data suggests, however, is that no matter where in the country you do business, you're going to have some clients that pay their invoices late. Those are invoices that you've provided goods or services for, and your overheads don't just go on pause and wait for your clients to pay. You still have to cover the operating costs and rental payments and staff wages or salaries, all while waiting for money you've earned.
"The recent up-tick in late payments appears to reflect a slowing in the overall rate of economic growth and the general sluggishness of the business sector," said Dun and Bradstreet Economic Adviser Stephen Koukoulas.
"There is a well established trend that larger firms (over 500 employees) are the slowest to pay invoices with smaller firms tending to be the fastest. That said, the overall trend showing a moderate increase in late payments over the past year has been evident across firms of all sizes."
No matter who your clients are, there's a chance they will pay their invoices late. You could rely on a small number of big clients to keep profits in your business up, but bigger companies (those with more than 500 employees) showed the worst late payments, averaging 18.2 days past the due date. Bigger businesses can have a large influence on the success of smaller suppliers, and they should have the economic stability to pay on time.
How can debtor finance help?
The best industry for late payment times was agriculture, averaging only 9.6 days over the due date.
The industry you operate in and the size of your clients don't matter - in Australia, it's likely that you will be paid late. The best industry for late payment times was agriculture, averaging only 9.6 days over the due date. That's still a long time to have to wait for your invoices to be paid, and it could turn into a serious financial burden.
By opening a ledger with Earlypay, you could enhance your business cash flow and ensure you always have enough money to operate as normal - or even push for growth. Debtor finance could be the financial saviour for your business, and you don't need to put up your business real estate as security. Your invoices are the security, so there's no risk to your company's health.
For more information about starting a ledger with us, get in touch today on 1300 760 205.