Breaking Stories

Australia, South Africa Take On The Late Payments Fight

Delayed and late B2B payments are a global issue, but this week’s B2B Data Digest shines a spotlight on two markets that are elevating the fight against late invoice payments to small businesses. South Africa and Australia are ramping up efforts to combat payment delays, both within the private and public sectors, as analysts warn that COVID-19 has made cash flow challenges for SMBs even more burdensome.

Five-day payment terms will be possible through Australia’s new eInvoicing solution, the nation’s Treasury announced recently. The initiative is part of its broader program that will require all government agencies to adopt electronic invoicing by July of next year to promote digitization in the government and broader economy. Through a collaboration with technology firms TechnologyOne and Link4, the Treasury is looking to accelerate payments to government suppliers through the digitization of invoices with five-day payment speeds, in an effort to support the small and medium-sized businesses working with the government, according to SmartCompany reports.

10-day payment terms will be the norm for the Victoria State Government in Australia, according to SmartCompany. The Victorian government announced late last week that it will pay small and medium-sized government suppliers within 10 days, a policy that will apply to contracts under AUS$3 million beginning Jan. 1 of 2021. According to small business and family enterprise ombudsman Kate Carnell, the policy is “a huge move that helps cash flow.”

30-day payment terms will once again be the policy for engineering company UGL after the Australian firm vowed to restore its shorter payment terms from its current 65-day payment practice. Mirage News said the move comes after the Australia Competition and Consumer Commission (ACCC) was notified last year that UGL had extended payment terms on new purchase orders and was forcing suppliers to work with supply chain financing company Greensill Capital should they need earlier payment. Further, reports said, UGL had been forcing suppliers to accept discounts on invoices paid early. In a statement, ACCC Chair Rod Sims said that while supply chain financing can sometimes be a good option for SMBs, “we are keen to ensure that supply chain financing is not used to push out payment terms for small business suppliers … especially [in] the COVID-19 environment.”

51 large organizations across South Africa have agreed to pay small suppliers within 30 days, part of a new initiative called #PayIn30. Reports in Mining Weekly said the effort is part of corporates’ efforts to support economic recovery and the survival of small and medium-sized businesses. Noma Mabikwa, financial manager of PPM, one of the companies participating in the 30-day payment agreement, said in a statement, “We know that one of the issues that SMMEs [small, medium and micro enterprises] deal with is the lack of cash flow. By paying on time, we want to make sure we don’t add to the hardships experienced during this difficult period.”

91 percent of South African SMBs are facing late payments, according to The State of Late Payments in South Africa report, published by Xero last year. The analysis also found that small businesses spend an average of 89.5 days every year chasing down late payments, with the average overdue invoice paid 18 days late. The data was cited by BuzzApex CEO Ivan Radmore in a recent article for BizNews. According to Radmore, “the ‘little guy’ is taken advantage of by customers, either using them as informal lines of credit or by making the business owner take time out of their core business activities to continuously follow up on payments.” He added that such late payment practices are “almost criminal.”

What is your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *