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The solution to small business late payments (Part 1)

Noel Tiufino (Managing Partner) and Raj Saini (Partner) from MyAccounts and Angus Capel (Small Business Advocate) from Xero, recently spoke to Creditorwatch about late payments and what small businesses can do about them.

In the Dynamic Business interview with Trent Innes at Xerocon (September 2019), we revealed just how much small businesses are affected by late payments. As Trent said, “at any one time there is around $115million outstanding between small business and big business that’s overdue.” He identified this as one of the biggest mistakes small businesses are making. 

This issue is important and we want to share the insights and solutions from this panel with you.

Late payments are really costing small businesses – and to Angus Capel, Small Business Advocate at Xero – it is staggering just how much. Trent Innes is quoting above from Xero’s explosive report, Paying the Price, which showed that there was $115 billion in late payments over the course of the financial year July 2017-June 2018. What separates the report from what we have seen in the past is that it was based off an analysis of 10 million invoices from 150,000 businesses.

“What was most surprising for me was that small businesses at any one point in time are owed $7 billion from big business. So effectively, they are stumping up an interest-free loan to the biggest companies in Australia that just never ends,” explained Angus.

“The second part of this report that was the biggest surprise for me was the economic impacts. A business that is paid slower than average grows its own revenue a third less than a business that’s paid on average or better terms. That’s huge!”

Angus explained that there can be a few reasons this is happening. People could be doing it because they haven’t been able to get around to it and there is no malice in it whatsoever. The invoice might need to get through a few departments to get paid correctly and therefore, it is a system problem. Then you have the other side of it as market power imbalance. In competitive industries, there can be an incentive to push out payment times. Big business could be saving $1.86 billion over 10 years in their own financing costs by having an ongoing $7 billion loan from unpaid small businesses extended to them.

So, how can we combat this problem? Everyone needs to play their part.

Big business has a responsibility to be leaders

It’s in big businesses’ best interest for small businesses to be a thriving part of the economy as well. Larger companies still rely a lot on small businesses. Secondly, they have a responsibility to be leaders in the economy. “I think they need to assume the role of the older sibling, being a leader and helping small businesses to actually reach their potential,” explained Angus. “First they could work their way through their complexity of systems and address the payment times issue. They have the market power and the size and influence to make those kinds of changes when small businesses can’t on their end.” There is an incentive as well because it will avoid red tape and future regulations for everyone.

But it’s a two-way street and small businesses have to work on solutions with their trusted advisor or bookkeeper.

Small businesses need to have a credit management process in place

Proper credit management and due diligence are essential for small businesses. Noel Tiufino, Managing Partner of My Accounts said that he finds that a lot of small businesses do not perform credit checks prior to issuing terms of trade.

“I think that small businesses think that credit checks are a tool of big business,” explained Angus. “So, I think it is really important that small businesses get this advice from their trusted advisor – be that the bookkeeper or accountant.”

“I don’t think that they know just how easy it can be. It’s just a matter of telling the clients and showing them how to use the technology available, like CreditorWatch,” explained Raj Saini, Partner at My Accounts.

“There should be credit management and a process for every client, whether they are in good times or bad and awareness that good times might turn into bad. So, you’ve got to remain consistent. For example – tracking Debtor Days and reporting on that on a monthly basis,” Noel explained.

“Every business, whether they are in a good position or a bad position, should have a technology-enabled process. The software to help with credit is accessible so there’s no reason why we shouldn’t be using it. These software packages are actually very accessible and I don’t think any are out of price point,” explained Noel.

Advisors and bookkeepers have a crucial relationship in a small business owner’s operation

Small businesses are so busy focusing on their day to day that they don’t know what information they need. Small business owners need to have awareness of what is happening in their industry, in the economy and how their customers/suppliers are paying. They also need advice on the latest technology that is available.

“I see advisors and bookkeepers as one of the most crucial relationships in a small business owner’s operation,” explained Angus. “Having the knowledge of what’s happening within the business and understanding all of that. And then communicating that back to the business owner in terms of industry norms and benchmarks. The other side is advising on technology solutions.”

Raj agreed, “We’re the best people to show what technology is out there and how it can improve their business.”

Start the conversation and keep the momentum

Everyone has a role to play in solving the payment time issue. “Small businesses and their advisors, all they can do is implement the best tools and the best practices that they have available to them. We can keep the conversations moving within our networks and create awareness,“ Angus explained. “If the problem persists, then we can start to put pressure where it is needed if it continues being a systemic issue.”

Part Two of this series will dive into just how accessible technology is and how it can improve your credit management process, as well as what you can implement to get paid faster.

About the panel 


Noel Tiufino is the Managing Partner of My Accounts – one of Australia’s largest bookkeeping firms. My Accounts has a focus in enabling accounting technology to ensure small business owners know the numbers that matter. Noel has been with the company since 2007, assuming the role of Managing Partner in 2016. Since then, My Accounts has expanded to offices in Sydney, Melbourne and Philippines, servicing small businesses across all of Australia.


Raj Saini is a Partner at My Accounts, first joining the company in 2010 as an Accounting Graduate, before taking a break to explore Audit and complete his CA studies with Lawler partners (now PKF). In 2013, Raj returned to My Accounts as a CA to lead a team of Bookkeepers. Now both a Partner and the CFO for My Accounts – Raj leads the technical accounting expertise of the team.


Angus Capel is the Small Business Advocate at Xero in Canberra following three years at a ministerial advisor in the Parliament House for Finance, Small Business and Small & Family Business, the Workplace and Deregulation. Passionate about small business and the role it plays within communities, Angus works to help solve the problems that block the sector from reaching its potential.

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Lindsay Simoncavage

Lindsay Simoncavage

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