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A leading financial expert is warning SMEs could see invoice payment times blowout to record levels before the end of the year.
New data from funding solutions company OptiPay shows the average days outstanding for invoices is 38 days but could be in the mid 40 days by December – a level not seen in the last decade.
“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 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 coming down hard on tax debts many businesses which have previously weathered the past couple of years are suddenly realising their cash flow options are now limited,” says Mr Sedgwick.
“With higher interest rates banks are tightening their lending so unfortunately pain is on the way for many SMEs who are struggling with cash flow as invoices are not paid on time.”
More than 11,000 Australian companies entered external administration for the first time in 2023-2024 according to ASIC, a 39% jump compared to the year before.
Construction and accommodation/food services were the industries worst affected.
“SMEs are finding it tough now but unfortunately we expect it will be even harder for them if they are unable to put safeguards in place like invoice financing.
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