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SMBs losing $22b in income due to late payments this Holiday season

Aussie SMBs facing potential $22 billion shortfall in income due to late payments this Holiday season Australian SMBs are feeling the pressure ahead of the holiday season this year, with a potential $22 Billion in invoices expected to go unpaid by 25 December. The latest research from global financial technology platform, Intuit QuickBooks, shows that SMBs are expecting an average 8 invoices will go unpaid between now and Christmas Day, with nearly one-quarter (23%) of them stating the pressure of unpaid invoices has been worse than ever this year. With Australian businesses generally shutting down over the holiday period into mid-January, this expected lack of cashflow is meaning extra pressure for Australian SMBs at a time where cost-of-living pressures are already biting.

Financial strain is affecting almost half (46%) of SMBs due to unpaid invoices ahead of the festive season, with almost a third of SMBs (32%) reporting that they are having to use their own personal funds to cover cash shortfalls when paying suppliers, as a result of missing invoices. Damien Greathead, Accounting and Advisor Group Lead at Intuit QuickBooks, said, “Small businesses are vital to Australia’s economy, contributing over $500 billion to our annual GDP2 . It’s concerning to hear how exposed our SMBs risk being this holiday season, facing challenges with income and cashflow at such a busy and expensive time of year.” And it’s not only the hip pocket being affected – chasing up invoices and managing business admin is causing undue stress and costs valuable time for SMBs, with nearly two-in-five (39%) SMBs spending up to 12 hours a month chasing late invoices.

The impacts are keenly felt, with nearly one quarter (23%) of SMBs citing they “feel bad chasing people for money”, while 21% felt angry when chasing these unpaid invoices. A further 20% reported feeling additional stress and 19% reported feeling overwhelmed when chasing unpaid invoices. The holiday season is usually a time to rest, recharge and spend time with family and friends, however the extra pressures SMBs are facing this year risk derailing their plans. Nearly 7-in10 SMBs (67%) are already admitting to sacrificing precious personal time to get on top of business admin, be that evenings during the week (67%) or while kids are at after school or weekend extracurricular activities (25%).

Meanwhile, those having to multitask admit managing admin on-the-go can be a struggle, with the majority of SMBs feeling this way (76%). 1 This figure has been extrapolated from the average survey response of our SMB of $8,684 to the question “How much do you estimate you will be owed in unpaid invoices as of Dec 25th 2023?” to the 2.5M SMBs across Australia. It is therefore an estimate only. 2 “The Australian Small Business and Family Enterprise Ombudsman, “Small Business Matters Report” issued 27 June 2023.

“It’s an overwhelming predicament which SMBs currently find themselves in – time poor, trying to keep on top of admin while running a business and getting paid on time to keep on top of bills. Our advice to small businesses is, you don’t have to go it alone – a financial advisor coupled with reliable and intuitive accounting software like Quickbooks can make a big difference in alleviating stress and keeping on top of business admin including invoicing and getting paid”.

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Of the businesses surveyed, 29% only engage an accountant or bookkeeper to assist with tax time, not for support throughout the year. Some of the reported benefits of having an accountant or bookkeeper managing their business throughout the year included time saving (34%) and reduction in financial stress (30%). And as to what SMBs would do with that extra time? As summer beckons, 39% would like to kick back with a beverage, 1-in-3 would rather be at the beach or at a BBQ with friends, whereas another third (34%) would prefer to hit the sack and catch up on some much-needed sleep – recharging the batteries for the new year.

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