Leading small business platform Xero has released new data showing an improvement in late payment times across July for small business owners in Australia.
The data from Xero Small Business Insights found that while businesses still wait on average just over 33 days to be paid on a 30-day invoice, it’s the best result since Xero started recording late payments in 2014.
This improvement comes as several changes arise in the small business sector, including faster payouts on federal government contracts and heavier use of payment services by small businesses.
“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, Managing Director, Xero Australia and Asia. “When a small business gets paid sooner, it has a measurable, positive effect.”
A recent Xero Small Business Insights special report, Paying the price, found that Australian businesses paid sooner than average grow revenue about 40 per cent faster than those paid slower than average. Business paid faster also tend to pay their own suppliers about eight days sooner.
While Innes said the improvement in payment times was a start, there was still more to be done to improve the prevalent late payment culture. Currently, over half of all invoices inssued by small business owners to big corporations are paid late. Xero’s dats suggests this equates to over $115 billion a year, tying up cash flow and growth opportunities.
“There’s still much work to be done outside of government,” said Innes. “Small businesses tell us that big businesses are their slowest paying customers by far. So it’s important that we keep putting pressure on everyone to pay their invoices on time.”