Yahoo Finance Most popular Aussie excuse for paying late: Creative or honest?
'Huge problem' for small businesses exposed.
Australian businesses have revealed some of the excuses for late payments they’ve copped as Aussies struggle to hand over cash on time.
We are living in a post-pandemic world but the virus is still going around and topped the list of excuses for late payments along with “my customers haven’t paid me so I can’t pay you”, according to CreditorWatch.
Others were “more creative”, or maybe just honest, stating, “I had to go to the grand final”, “I left my wallet in my mistress’s car”, and “I got hit on the head and forgot to pay”.
Construction, manufacturing, IT and media and telecommunications industries reported the most late payments, but 82 per cent of those surveyed said they had late or overdue payments over the last six months. Concerningly, small businesses reported higher rates of late payments which CreditorWatch CEO Patrick Coghlan said was a “huge problem”.
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“Some of the excuses businesses received for delayed payments were very quirky and quite unbelievable but any late payment can have a serious impact on a business that is already struggling with a range of other challenges, especially small and medium-sized businesses which are operating on much tighter margins than larger businesses,” Coghlan told Yahoo Finance.
The report found late payments were impacting the growth of Australian business, creating uneven cashflow that can make it considerably more difficult to cover their own payments.
“Non-payments compound the pressure that Australian businesses are currently under due to labour shortages and cost pressures from high prices for materials, energy, rents, fuel and insurance, as well as rising interest rates,” the report found.
There’s generally an uptick in late payments over the Christmas and New Year period, but there are warning signs including customers becoming hard to contact, changes in purchasing behaviour or new default listings lodged by other suppliers.
CreditorWatch recommends setting up a follow up process with reminders, registering defaults and following through on debt collection.
“Just like managing a small child’s behaviour, if you threaten a customer with stop credit or escalation to debt collection but don’t follow through, you’re unlikely to get the result you want,” CreditorWatch said.
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