Recent research (East & Partners) shows that the average SME waits for up to 56 days to receive their payments for services that they provided or products that they’ve delivered. Almost twice the recommended payment time of 30 days.
The report also suggests that small businesses that fall in a lower revenue spectrum of $1-10 million tend to suffer more than SMEs with higher revenue.
Obviously, this is related to the way smaller companies have to always acquire new sales to keep their cashflow alive. Therefore, it is common practice to take the order, even if they know upfront that their business partner might not pay them for another 60 days.
However, this is also related to the fact that SME’s, due to a smaller annual revenue in general, often can’t set aside the money or time to chase their debtors or run an accounts receivable department. For most smaller businesses (below 5 million in revenue) it is already a struggle to meet their tax requirements
Poor cash flow always leads to poor decision making because the pressure of always getting “fresh money” into the system while waiting for invoices to be paid naturally leads to increased stress for the owner or manager.
Actively reducing the payment time to a minimum and chasing overdue debtors will eventually also be more beneficial for the economy in general. Money that is paid on time can be reinvested into the growth of a company and the local community.
Hi I’m Sally helps you to recover your outstanding payments earlier. Don’t wait another 60 days.
Original post: https://insidesmallbusiness.com.au/latest-news/payment-times-for-smes-still-twice-as-long-as-they-need-to-be