Late payments causing more than a headache for SMEs

* 77% of businesses are impacted when a customer doesn’t pay

* Over half experience stress and anxiety due to late payment

* 72% agree regulations should be introduced by the Government to ensure prompt payment

New research from MYOB has found a majority of Australian small business operators experience both business impacts and personal challenges due to late customer payments.

The latest SME Snapshot from cloud accounting provider, MYOB, revealed 77 per cent of businesses had felt some sort of business impact due to a customer not paying their bills on time, while only 23 per cent saw no impact at all.

The effects of late payment include impacting business owners’ personal finances (35 per cent) and the ability to cover expenses such as rent and power (32 per cent).

Late payment also takes an emotional toll on SMEs, with 52 per cent confirming it impacts 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. The financial health of Australia’s small business owners should be a top priority and the research indicates this also has a direct impact to their own personal wellbeing. 

“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,” said Mr. Reed.

The survey also found that 72 per cent of small business owners were in favour of introducing a voluntary code to encourage businesses to pay more promptly.

“Given the overwhelming support for this initiative, it would be a positive move to see the government and big businesses to put forward an initiative to implement a national prompt payment protocol to ensure small businesses are not being delayed payments by other businesses.”

This follows a recent call to action from COSBOA calling for the development and implementation of a national prompt payment protocol where signatories voluntarily agree to abide by the rules of the protocol and are publicly recognized for doing so.

“Some big businesses are taking more than 90 days to pay an SME despite agreed payment terms being 30 days – and this can be the difference between insolvency and a healthy business continuing to operate,” said Peter Strong, CEO of COSBOA.

When asked what they thought the main reason for late or slow payments were, 52 per cent of survey respondents indicated a lack of regard for invoicing terms and payment processes. This was followed by almost half (46 per cent) of respondents nominating cashflow issues among 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,” added Mr Reed.

These findings echo previous MYOB research from last month’s SME Snapshot, which revealed 54 per cent of small businesses have previously waited over six months to be paid by a customer, with more than seven in ten writing off money owed to them.

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For further comment or other information please contact:

Saba Chowdhury, MYOB

P: 0400 300 913 / E: Saba.Chowdhury@myob.com
 

Georgia Colahan, Ogilvy PR

P: 02 8437 5384 / M: 0432 882 080 / E: Georgia.Colahan@ogilvy.com.au
 

About MYOB 

MYOB Group Ltd (ASX: MYO) is a leading cloud based business management solutions provider. It makes business life easier for approximately 1.2 million businesses across Australia and New Zealand by simplifying accounting, payroll, tax, practice management, CRM, job costing, inventory and more. MYOB provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and in 2015 was awarded the BRW award for the most innovative large company for 500+ employees and placed 2nd in BRW’s Most Innovative Companies Award list across all categories nationally.  For more information, visit http://investors.myob.com.au/Investors or follow @MYOB on Twitter. 

About the MYOB SME Snapshot

First carried out in July 2015, the MYOB Snapshot is a monthly online survey of a section of MYOB’s 1.2 million customers. The survey provides the opportunity to quiz SMEs about topical issues and their responses to business conditions.