SMB Minister Julie Collins has doubled down on her mission to name and shame big businesses that fail to pay small businesses in less than 30 days, this week releasing draft legislation to overhaul the Payment Times Reporting Act 2020 and introduce reforms that will help level the playing field for small businesses.
It comes as GoCardless has today released new independent research by YouGov this week. The research looks at the pressure that late payments and economic stress are putting on SMBs and the need for systemic payments reform.
The current SMB outlook is bleak with insolvencies up 37% from 2022. ASIC data shows 11,223 companies collapsed in 2023. Cashflow is a leading cause of business failure. and considering businesses are waiting on average up to 47 days to get paid, it’s clear why Minister Collins is taking action.
The GoCardless Pursuing Payments report echoed these issues (full report attached, but here are some highlights)
SMBs are losing money on late payments:
-
-
27% of businesses estimate losing up to $6,000 from late payments annually
-
11% of businesses estimate losing $12,001 – $30,000 from late payments annually
-
Over half (55%) of Australian business leaders are concerned that the number of late-paying customers will increase over the next 12 months due to the rise in the cost of living.
-
Chasing up late payments is taking a mental toll, especially on young people & women:
-
Business owners are avoiding conversations about late payments with their customers because it’s stressing them out at work (37%) and worse, increasing their personal stress levels (43%)
-
Over half of millennial business leaders (62%) agree they feel uncomfortable asking customers for payment
-
46% of women, in contrast to 40% of men, say they would feel uncomfortable chasing customers for late payments.
The appetite for tech-driven reform to solve pain points is growing, particularly among women:
-
62% of Australian business owners/decision-makers are interested in introducing technology to reduce the rate of failed payments
-
65% say they would be interested in introducing technology to reduce the need to chase late payments
-
72% consider having their payment system go down during a peak period to be a payment nightmare
-
84% consider losing a significant amount of money to fraud or scams to be a payment nightmare
