Australia’s SME manufacturers are owed A$2.9 billion in unpaid bills which is costing them growth opportunities, according to new research from the Invoice Market (IM).
The IM report shows that small and medium enterprises (SMEs) are each owed $35,833 on average by debtors.
It also finds that 37 per cent of manufacturing SMEs have no strategy in place to manage their cash flow. This lack of strategy affects their ability to pay housing expenses and other operational costs.
Also, 44 per cent of the SME manufacturers’ customers sought to extend payment terms in the last 12 months, which suggests customers are themselves having problems with cash flow. Finally, four per cent of the SME manufacturers have to remind customers to pay four or five times.
Invoice market chief executive Angus Sedgwick says that the findings have important consequences for the sector.
“One of the most striking findings of this report is that while late payments cost companies money, it is the hidden cost in time that is the most revealing,” Sedgwick said.
“It doesn’t have to be this way. If SMEs can free up their cash flow, it will not only help their own businesses, but it will have profound benefits for national economic growth and job creation,” he said.