Show me the money: More small businesses in Australia are being paid on time now than in previous years
Global small business platform Xero has released new data showing the best on-time payment figures since 2014
Xero has released new data showing an Australia-wide decline of nearly 2.5 days in late payments for July. This is the biggest June-July drop in three years.
Managing director of Xero Australia and Asia Trent Innes said, "We're pleased to see these faster payments, and we'll be monitoring the effect on small businesses as we go forward. When a small business gets paid sooner, it has a measurable, positive effect."
The report also showed that businesses that are paid sooner also tended to pay their suppliers eight days sooner than average, showing the positive effect on-time payments have within the Aussie marketplace.
So, why the improvement?
This improvement comes as a result of several changes within the small business sector, including heavier use of payment services by small businesses and faster payouts on federal government contracts.
And the bad news?
It's not all good news, as the data also showed that most businesses are still being paid late, with the average wait on a 30-day invoice being 33 days.
The biggest culprit for making late-payments are big businesses, according to Xero's data report, with over half of all invoices issued by small business to big business being paid late. These late payments are a hard hit for small businesses and total up to the tune of about $52,000 in late payments for every small business in Australia. That's over $115 billion a year.
While being paid three days late on average is less than ideal, it's still the best figure since Xero Small Business Insights started recording their late payment observations in 2014. It can be chalked up as a win for small Aussie businesses, as many small business owners will understand that every day counts when it comes to getting your invoices settled.