Results of Dun & Bradstreet’s (D&B) latest trade payment analysis have shown business cash flow has slowed this year.
D&B is a business information company. The analysis is conducted quarterly, aimed at providing sector and state analysis of payment trends and the impact on businesses. Business trade information is reported every month.
The increase in payment times is due to weak sales activity, a high Australian dollar and concerns about operating costs, as per the report. D&B business expectations surveys found the biggest barrier for business growth was operational costs.
According to the research, businesses are waiting an average of 55 days to be paid by other companies during the first quarter of 2013. In the previous quarter, the average was 52 days.
The largest companies (with over 500 employees) in the analysis have taken 58 days to pay business invoices, the slowest of all businesses.
D&B’s findings show small companies (less than 20 employees) take an average of 53 days to pay and medium companies (50 to 199 employees) are settling payments in 50 days.
From the analysis, only 38% of all invoice payments in Australia are paid on time.
D&B believe flowing cash flow cycle can impact a business’ capacity to cover costs and limit their expenditure and investment in the growth of their business.
“In this environment, a slowing cash flow cycle further hits businesses,” said Gareth Jones, CEO of D&B. “Their ability to spend money and invest in the growth of their business, and by consequence the economy, is limited when they’re kept waiting for payments.”
“More significantly, however, is if late payments are impacting a business’s ability to cover its own costs of operation. We know that 90 per cent of small businesses failures are caused by poor cash flow.”