In a recent article posted on www.smartcompany.com.au it has been revealed that the average small business is owed $11,588 in overdue debts.
Small businesses need to be more aggressive in chasing down bad debts, the sector has been warned, with research released today showing the average SME is currently owed $11,588 in overdue debts.
The release of the Commonwealth Bank research comes just two months after Dun & Bradstreet data revealed average payment terms have remained high for small business.
The Commonwealth Bank research has found nearly two thirds of all payments are overdue and that small businesses are losing 16.5 million work hours each year in chasing small payments.
The research, which surveyed 750 small businesses, also discovered 95% of respondents said it’s vital debtors pay them on time to ensure healthy cashflow, while 78% said late payments cause them to delay payments to suppliers.
The study also found small businesses are spending on average two hours per month chasing up late payments – equating to 16.5 million hours lost across the country.
In the past 12 months, the survey found cashflow issues have caused 47% of businesses to pay invoices late, and 22% to pay staff wages late. Almost a quarter of small business owners have also previously managed a business that needed to close down.