Late payments leave small business owners in the lurch

Research from recurring payments specialist, Go Cardless revealed 75 per cent of Australian SMB owners said they can’t be sure they’ll be able to pay their own bills on time due to unpaid invoices.

Despite recent government reforms, late payments continue to be an ongoing battle for Australian SMB owners with delayed payments directly impacting businesses, and owners. the research by Go Cardless has also found a negative ripple effect from one business to another as small business owners are forced to pay their own suppliers late whilst they wait for outstanding invoices to be paid.

The GoCardless research surveyed 250 SMBs across Australia on the challenges and impacts of late payments to business owners.

The research findings found that late-payments are the second biggest concern for Australian SMB owners, after rising labour costs. Over 80% of this group admit that they would be able to grow their business faster, and sleep better, if they had greater certainty about when their payments would come in.

According to results from an Inquiry conducted by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), almost 50 per cent of small businesses experience late payments on at least half of the bills owed to them. The Inquiry also found that almost 70 per cent of respondents reported that the practice has reduced business profitability, with many business owners acknowledging it has a serious impact on their mental health given the added stress and anxiety late payments – and the associated cash-flow problems – can trigger.

Joseph Robins, Australia Country Lead of Go Cardless comments: “It’s unacceptable for small business owners to have so much uncertainty around their payments. Late payments are one of the main challenges faced by Australian SMBs. When late-payments result in business owners taking emergency finance or not being able to pay their bills on time, it’s time to do things differently. Currently, only 32% of Australian SMBs are using tech solutions to ensure they’re paid on time.

“Australian businesses need more certainty around when they get paid and Direct Debit is a great way to overcome problems associated with late payment. Business owners should be able to focus on running and expanding their business, not spending days chasing unpaid invoices.”

The GoCardless research also revealed that:

– 88 per cent of SMB owners consider certainty around payments to be valuable or essential to their business

– 83 per cent agree that uncertainty around when payments will come in will make them more stressed and anxious

– More than 70 per cent agree that it means they can’t grow their business in the way they want or make best decisions for business due to late payments

– 43 per cent have had to use emergency or personal finance due to late payments