Does it feel like your B2B customers are taking forever to pay up? It’s not all in your imagination.
According to research by Dunn & Bradstreet, Australian businesses are waiting just over 26 days past the due date for their invoices to be paid, which is the longest overdue period of any country in the world – worse than second-place Mexico by almost eight full days.
The problem is especially bad for small businesses who supply larger ones and has increased over the last decade. In the wake of 2008’s Global Financial Crisis, many large corporations lost access to their normal lines of credit and began to use their supply chains as an alternative means of managing their cash flow, pushing out payment terms further and further. Dunn & Bradstreet’s 2016 survey shows that companies with more than 500 employees are today paying their invoices, on average, 52.4 days after receiving them.
In the United Kingdom, the issue of long payment was tackled with the introduction of 2008’s ͞prompt payment code͟. This voluntary code of practice has since been adopted by 60% of the UK supply chain. It requires participants to agree to pay their suppliers on time and to be transparent and encourage best practice. In turn, it encourages other companies to do business with them. Evidence suggests this has improved the payment turnaround in the UK by a whopping 12 days. Unfortunately, despite a 2013 attempt to introduce a similar prompt payment protocol to Australia through the submission of discussion papers to the government, nothing eventuated.
In the absence of any formal legislation to help curb this problem, a Cash Flow & Invoice Funding loan from Business Fuel could be the answer to your long-payment problems. This loan helps you liberate funds tied up in unpaid orders to immediately reinvest in more stock, equipment or labour to generate additional orders. It also enables to you meet other business expenses while you wait for large or late payments to come through. Unlike other cash flow funding solutions, you don’t need to produce an invoice to access the cash. You can apply for a Cash Flow & Invoice funding loan from $5,000 to $250,000.
If your business is being held back by clients who insist on long payment terms or persistently pay late, give the friendly and experienced team of loan managers at Business Fuel a call today, and we could have all your outstanding invoices covered in as little as 48 hours, allowing you to get on with business.