A new survey has revealed that Australian businesses are hurting themselves and each other and setting themselves up to be locked out of the credit market as a result of poor payment priorities.
The latest Dun & Bradstreet (D&B) Business Payment Priorities Study has revealed that 66 percent of businesses surveyed are prepared to miss supplier payments if they are unable to pay all their accounts and a further 15 percent are prepared to a miss a tax payment. Further to this, many firms are unaware of the implications of paying late on their ability to access credit.
By failing to pay these bills, many businesses are finding it difficult to access credit and are facing penalties from the tax department, says D&B CEO Christine Christian.
“Cash is absolutely critical to business survival and prosperity in an economic recovery,” she said. “However, the payment habits of Australian firms are making cash flow management increasingly difficult.”
The study revealed that 61 percent of businesses would be more likely to pay their bills on time if they knew late payments were being listed with a credit reporting bureau and would worsen their credit standing.
“The study’s findings demonstrate many firms…. don’t fully understand the consequences of their payment behaviours,” said Christian.
Christian has urged businesses to take action to improve their cash position by dealing appropriately with administrative issues.
“In this environment, survival and prosperity are dependent on firms maintaining a strong focus on the fundamentals of cash flow management and implementing the right strategies to ensure that customers pay promptly,” she said.