The average number of days outstanding for invoices stands at a sluggish 38 days, according to new data from funding solution company OptiPay.
Unfortunately, the already high number could go as high as the mid-40s by December – a level not seen in the last decade.
“This slowdown in payments is having a knock-on effect down the whole supply chain across just about all industries,” explained OptiPay CEO Angus Sedgwick. “It’s a sign businesses are under mounting financial strain and are starting to become selective about the timing of when they pay invoices.”
OptiPay also noted that it is continuing to see an increase in invoice financing enquiries from SMEs who need access to working capital.
“With the ATO coming down hard on tax debts, many businesses which have previously weathered the past couple of years are suddenly realising their cash flow options are now limited,” said Sedgwick. “With higher interest rates, banks are tightening their lending, so unfortunately pain is on the way for many SMEs who are struggling with cash flow as invoices are not paid on time.”
More than 11,000 Australian companies entered external administration for the first time in 2023-2024 according to ASIC, a 39 per cent jump compared to the year before, with construction and accommodation/food services being the industries worst affected.
“SMEs are finding it tough now but unfortunately we expect it will be even harder for them if they are unable to put safeguards in place like invoice financing,” Sedgwick concluded.
This article was first published on sibling website Inside Small Business.
