As a small-business owner, you know how frustrating it can be to have outstanding invoices in your accounts receivable. When you don't get paid for goods or services you've already provided, it can halt your business productivity, or mean you have to pay people without the available working capital.
One solution to help your business flourish when it isn't being paid is to use debtor finance. Coles supermarket has come up with another, more specific solution as well.
What is Coles planning to do to help small businesses?
The supermarket giant has pledged to pay their invoices within 14 days.
Specifically for suppliers that provide Coles with at least $1 million worth of products each year, the supermarket giant has pledged to pay their invoices within 14 days.
"Coles relies on small Australian businesses to deliver thousands of different products for our customers every day," said Coles CEO John Durkan to SmartCompany in a March 3 article.
"By providing a little extra support, we want to help their businesses to flourish so that together we can keep providing our customers with great quality and value."
The new initiative will be in place from July 1 and Coles believes it will benefit over 1,000 of their suppliers. This will be a major boost to the health of SMEs in Australia, and could set the tone for the rest of the big businesses to change their tune.
According to Dun and Bradstreet research from Q4 2016, businesses with more than 500 employees are the slowest at paying their invoices, averaging 18.2 days past the due date. These companies are influential in more ways than one. They could be the biggest customer of a supplier, and that supplier relies on their payment to function as normal. When big businesses put off their payments, they can severely impact the health of smaller Australian businesses.
"Cash flow is king for small businesses, so for a big player like Coles - one of the country's largest supermarket retailers - to take affirmative action on this is a welcome move that will make a big difference in the lives of hundreds of small businesses," stated Australian Small Business and Family Enterprise Ombudsman Kate Carnell.
While this is certainly a step in the right direction, Coles is not the first big business to commit to paying invoices faster (but the 14-day deadline is the fastest so far). Earlier in the year, Telstra committed to 30-day turnarounds, which is a maximum credit term. While it's great that the telecommunications giant has pledged to be better at paying invoices, 30 days is still a long time for some smaller suppliers to wait.
How can Earlypay help?
We also don't take your real estate as security - that's the role of your invoices.
If 30 days is too long for you to wait for payment, or even 14 days, your business would benefit from debtor finance. Rather than having to wait more than two weeks for money you're owed, you can have funds in your account within five days.
We also don't take your real estate as security - that's the role of your invoices. Your clients are the security, so if we think they're sound financially, we will be one step closer to accepting your application.
While 30 days is a good start for Telstra, and 14 days is a great precedent for Coles, small businesses need these sorts of regulations in place for all businesses around the country. It's virtually impossible to run a profitable business when you don't get paid what you're owed on time - especially if you don't make use of debtor finance services.
For more information on how debtor finance can help your business to succeed, make sure you get in touch with the team at Earlypay today.