The majority of Australia’s SMBs are still suffering from the effects of the GFC, with client payments taking longer to be received, according to a new survey.
The Dynamic Business Credit and Debt Survey, conducted last month by Australia’s leading SMB publication Dynamic Business, found that 73 percent of SMBs said that the time taken for client payments to be received had increased in the last six months. Compared to the previous year, the survey also found that 59 percent of SMBs are expecting an increase in the level of bad debt as a percentage of total annual revenue for 2009-2010.
The statistics reveal the significance of good cashflow management, Director of New Vertical Partnerships at American Express Matthew Nolan told Dynamic Business.
“(Businesses should) keep an up-to-date cash flow that includes pending payments and expected sources of income. By listing and then scheduling payments and receipt of income, it will identify cashflow requirements and help ensure there are available funds to meet commitments,” Mr Nolan said.
“It will also help prioritise payments so that the most important ones are paid first, as well as preventing spontaneous spending on non-essential items when payments are received,” Mr Nolan added.
The Survey also indicated that nearly 60 percent of SMBs have experienced an increase in the number of clients defaulting on their payments over the past 12 months.
Businesses can reduce the number of defaulters by invoicing clients promptly and regularly completing follow-ups to ensure that payments are received on time, according to Mr Nolan.
“If things are looking particularly grim and payments need to be stretched beyond the due date, minimise the risk of an unpaid creditor cutting off supply by pro-actively contacting them. Through letting suppliers know that you haven’t forgotten about paying, they’ll be more inclined to believe the commitment will be honoured and encouraged to provide you with a little extra time,” Mr Nolan said.