Time is running out for SMEs to collect outstanding debts, and put their businesses in an ideal position for the new financial year.
And in the current economic climate, you really don’t want to start off behind. According to Dun & Bradstreet research findings, a business which runs on a standard 10 percent net profit margin would have to earn $25,000 extra in sales to make up for a bad debt of just $2,500.
“In the current environment, with funds expensive and difficult to access, the importance of tapping available sources of funding cannot be overstated,” says Christine Christian, CEO of Dun & Bradstreet. “Executives need to be savvy in their cash flow management, and this means that getting paid on time should be a central focus for executives.”
When it comes to paying late, big businesses and public companies are the worst offenders, averaging 62.7 and 64.5 days.
“Businesses, particularly small and medium sized enterprises, need to understand that they deserve to be paid on time no matter who their customers are,” says Christian. “The message is particularly important in the current economic climate as we want to avoid a significant increase in the number of Australian companies becoming victims of financial distress.”