MYOB survey finds 77% of small businesses are impacted by late payments
The SME Snapshot survey examined the real impact of late customer payments for Australian small businesses.
A new survey from MYOB has found more than three-quarters (77%) of Australian SMEs are impacted when a customer doesn't pay on time, and nearly as many (72%) believe the government should introduce regulation to ensure prompt payments.
Late payment of invoices has garnered a lot of attention recently after it was revealed that Australian businesses have the longest delays in the world before invoices are paid, which is keeping $19 billion out of small businesses annually.
The SME Snapshot survey, which examines a section of MYOB's 1.2 million customers, also found that late payments affect the personal finances of 35% of business owners, and it impacts 32% of owners ability to cover expenses such as rent and power. A staggering 52% said late payments affected their stress and anxiety levels.
Tim Reed, CEO of MYOB, said the results indicate a clear call for action.
"It’s unfair that many small business owners are being subjected to late payments on top of the day to day challenges of running their own business," Reed said. "The financial health of Australia’s small business owners should be a top priority and the research indicates this also has a direct impact on their own personal wellbeing."
Calls have been made for a prompt payment protocol, similar to what has been introduced in the UK, and involves businesses voluntarily agreeing to make payments to small businesses on time. The aim is for businesses to be able to advertise they have signed up to the code, thereby encouraging others to do businesses with them.
The reasons for the late payments were varied. Over half (52%) of survey respondents indicated a lack of regard for invoicing terms and payments processes, while nearly as many (46%) citing cash flow issues with customers.
"We know from previous MYOB research that cash flow concerns are consistently a top pain point for SMEs, but the lack of regard for their external terms and processes highlights a new concern for these business operators,” Reed said.
A previous SME Snapshot survey found that 54% of small businesses had waited over six months to be paid by a customer, while more than seven in ten wrote off money that was owed to them.
While Reed admitted the implementation of a national prompt payment code would be a positive move, he said fixing the long payment culture comes down to everyone involved.
"Improving this situation to ensure all businesses are being paid on time should be a shared responsibility across Federal Government and businesses of all sizes,” he said.