Late invoices blow out as businesses feel the squeeze

New data from funding solutions company OptiPay shows businesses are taking longer to pay their bills as the global recession kicks in and SMEs begin to succumb to cash flow pressures.

The average days outstanding for invoices has increased by a week from 31 days to 38 days in just 6 months.

“This slowdown in payments is having a knock-on effect down the whole supply chain across just about all industries,” says OptiPay CEO Angus Sedgwick.

“It’s a sign that businesses are under mounting financial strain and are starting to become selective about the timing of when they pay invoices” he says.

OptiPay is continuing to see an increase in invoice financing enquiries from SMEs who need access to working capital.

“With the ATO back collecting tax debts that had been put on hold during COVID, as well as the SME Recovery Loan scheme and JobKeeper ending and continuing supply chain issues, many businesses which have previously weathered the past couple of years are suddenly realising their cashflow options are now limited,” says Mr Sedgwick.

“Banks are tightening their lending and there are no more government handouts so unfortunately pain is on the way for many SMEs.”

There were 3917 liquidations or administration appointments for Australian companies in 2021-22 with the biggest number of collapses in NSW and then Victoria.

28% of these insolvencies were from the construction industry.

“I think this is just the beginning,” says Mr Sedgwick.

“I expect we’re about to see insolvency levels go through the roof and the next 2 years are going to be really hard for business.”

“We know the construction industry is doing it tough but we’re also seeing ripples across most industries” he says.