The survey of 355 CFOs from companies turning over between USD 2m and USD 300m per year shows they’re unable to reconcile almost one third (30%) their supplier invoices ‘at least every other month’, meaning the issue of late payment of suppliers is ‘endemic’ amongst mid-sized businesses.
The issue of late payments was not only impacting suppliers, but could also be costing mid-sized usinesses billions of dollars every year.
More than half (54%) of Australian mid-sized businesses unlocked USD 1.84billion 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.
Almost all CFOs surveyed (94%) said they would value the opportunity to pay suppliers on time; however, they cited cash flow pressures as the number one factor when deciding how to pay suppliers. Given the opportunity to extend cash flow for up to 50 days, nearly one third of CFOs (30%) said they would prioritise early payment of suppliers.
In related news, cloud accounting provider Xero has released has released the following finding of a survey of more than 500 small businesses to highlight the burden of late payments:
Xero Australia MD Trent Innes said these findings are compounded by the company’s invoice data showing that, over the past six months, one in five invoices payable by ASX 200 companies to small businesses have been overdue by more than 30 days, with more than 3.8 million invoices currently overdue to its own small business clients.
Many big businesses require smaller peers to pay invoices within seven days, while taking weeks or months to pay their own bills. This inhibits the ability of small businesses to pay suppliers, staff and themselves, plan for the future and, in some cases, it puts them at risk of insolvency. According to our survey, the main reason respondents gave for big businesses holding up payments include red tape and procedures (83%). In addition, 78% said big businesses try to get away with what they can with deferring payments by pushing their weight around.
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