Unpaid customer bills are costing the economy $76 billion and crippling small businesses, according to a new report
Fintech financier The Invoice Market estimated that 2 million small businesses are “drowning” in unpaid bills and are constantly owed an average of $38,000.
The report found that the mining, hospitality, tourism and real estate sectors are the biggest bill shirkers, with schools and health services having the lowest rate of delinquent debts.
The excuse for late payments have gone beyond the traditional “the cheque’s in the mail”, to “being lost in the system”, “in dispute”, “reviewed internally” and “processed offshore.”
The study argued the crisis of unpaid bills indicated a new culture of “corporate selfishness” developing across Australia. But Angus Sedgwick, chief executive of The Invoice Market, said business owners have heard all the stories and know a dodgy excuse when they hear it.
“Businesses know the truth and see it as a fudge,” Mr Segdwick told the ABC.
“Our research shows that, on multiple occasions, small business owners are having to ask as many as five times for their outstanding invoice to be paid.
“It’s causing a crippling effect on their own business and their ability to pay their own creditors, hire new staff and move their own business forward.”
he research found 46 per cent of small business have to ask two or three times for errant customers to pay their bills.
Half a million jobs could be added, finds report
Angus Sedgwick estimates that 500,000 new jobs could be created if small and medium businesses were able to improve their cash flow and build their businesses.
“Having an additional 500,000 Australians in work would in turn take pressure off federal public spending and usher in a new era of national productivity growth,” Mr Sedgwick said.
The Australian Securities and Investments Commission says poor cash flow is a factor in 40 per cent of business failures.