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More than a fifth of professional services businesses, including accounting practices, are unable to reconcile their invoices at least every other month, according to a new survey.
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Late payments endemic hitting accounting industry
28 March 2017
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An American Express survey of 355 CFOs revealed that mid-sized professional services businesses owed an average of $33,000 in outstanding supplier payments, with 21 per cent overdue.
This research comes as a nationwide inquiry commissioned by The Australian Small Business and Family Enterprise Ombudsman is due to release recommendations on possible solutions aimed at resolving the ongoing issue of late payments for small and mid-sized businesses.
A study by UK-based MarketInvoice found Australia having one of the longest payment times in the world, with businesses being paid 26.4 days late, with the next latest country, Mexico, with 18.6 days.
Martin Seward, vice president for small & medium enterprises at American Express Australia, said that the issue of delayed or late payments was not only impacting suppliers, but could also be costing mid-sized Australian businesses billions of dollars every year.
“There is no doubt that suppliers rely on timely payment, with many going as far as to offer financial incentives for early payment,” Mr Seward said.
“In fact, more than half (54 per cent) of Australian mid-sized businesses unlocked $1.84 billion in savings last year through negotiating early payment discounts with their suppliers, leaving them open to extra cash flow to reinvest back into the business for research and development, or something as simple as staff recognition programs.
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“It’s encouraging to see that businesses and their suppliers can both benefit from preferential payment arrangements, but concerning that not all Australian mid-sized businesses recognise the value of timely payment – both to their suppliers and their own businesses.”
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