Recent data has charted the largest June to July improvement in late payments to small business in more than three years - increasing the pace of revenue growth for these enterprises by as much as 40%
However, according to Xero Small Business Insights a 2.5-day decline in late payments has left businesses waiting 33 days on average to be paid on a 30-day invoice.
“We’re pleased to see these faster payments, and we’ll be monitoring the effect on small businesses as we go forward,” said Trent Innes, MD of Xero Australia and Asia.
“When a small business gets paid sooner, it has a measurable, positive effect.”
Xero's research found that businesses that are paid faster than the average, experienced revenue growth around 40% faster than those that are paid slower than average.
In July, 54.6% of businesses were cash flow positive, the best monthly result recorded by Xero.
However, there remains “much work to be done”, according to Innes.
Xero estimates the 53% of trade credit invoices paid late by big business suppliers and customers to be worth $115bn.
According to the most recent data, there are more than 2.3m small businesses that account for 35% of Australia’s GDP and 44% of private sector employment.
There has been a steady stream of resources and products launched in recent months to help brokers meet these cashflow needs of Australian small businesses, with new lenders moving into the market to help fill the funding void.
In September alone, small business lender Prospa stepped up the education it provides to help brokers boost their small business lending expertise, while the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) is in the process of finalising its comprehensive guide to help brokers better understand and communicate the solutions available to their SME clients.
