We all know that that cash-flow is the lifeline of every business, right? So if Australian businesses have to wait nearly eight weeks to be paid by their customers, then how exactly are they still surviving? Divine intervention?
Dun & Bradstreet’s latest Trade Payments Analysis (TPA) indicates that during the second quarter, the average invoice has taken 54 days to get paid. Despite the fact that this is an improvement from the previous quarter’s 55 days, a one-day reduction is honestly just a drop in the ocean.
Gary Green, National Sales Director for Bibby Financial Services said SMEs, which form the backbone of the Australian economy, are experiencing rising costs, sluggish consumer spending and cash-flow difficulties because companies are taking longer and longer to pay their bills.
“Added to this strain are concerns about Australian economic growth and the federal election, which have caused many businesses to put their employment and investment plans on hold. That is putting upward pressure on the jobless rate,” Green noted.
If you take a close look the trends of D&B’s analysis, you will notice that trade payment times in Australia increased steadily during the hard economic times of the global financial crisis. When the storm cleared a bit, they improved through 2011, and even more in mid-2012.
These improvements, however, have been overturned in the past six months as the pressures of the current business environment make it harder and harder for companies to pay their bills.
Another survey released recently, the NAB Monthly Business Survey for July 2013, found that business conditions are at the lowest they have been in four years. This in turn is slowly sapping the morale out of entrepreneurs. Business confidence has also slumped to an eight-month low, despite a falling Australian dollar and lower interest rates.
Conditions are especially very poor in manufacturing, construction, mining, retail and wholesale sectors. Despite the fact that employment conditions are still weak, labour costs growth surged in July mainly thanks to the implementation of a higher national minimum wage on 1 July.