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SMBs Can Blame Large Firms For Cash Crunch, Says Xero

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A new report from SMB accounting company Xero says large companies are causing a cash flow strain on small businesses.

The company said Tuesday (Mar. 7) that Australia’s largest corporations are squeezing small suppliers through delayed invoice payments. Invoice data collected over the Xero platform in the country found that a fifth of invoices sent to ASX 200 companies by SMBs are more than 30 days past due. More than 3.8 million invoices sent via Xero in the last six months are currently overdue, the company added.

Nearly two-thirds (65 percent) of SMBs surveyed said they had an overdue invoice by at least 30 days at some point in the past six months. More than half said they currently have an invoice on the books that is at least a month overdue for payment.

Reports highlighted separate stories in the media regarding top Australian companies like Woolworths and Rio Tinto lengthening their payment terms to small suppliers to take advantage of the capital float. Late payments in Australia have caught the attention of the nation’s small business ombudsman, who is readying to release a report on the issue next month, reports said.

A voluntary payments code may also be established, reports noted.

“The data shows that we’re significantly failing small businesses in Australia,” said Managing Director of Xero Australia Trent Innes. “There are 2.1 million small businesses in Australia, employing 4 million people. Together, those businesses collectively contribute a third to private-sector value to our national GDP.”

“There’s no doubt that small businesses are a core part of the Australian economy, but when big businesses fail to pay on time, small businesses are forced into what we call a cash flow gap,” the executive continued. “Any business that lacks the resources to fund this gap or otherwise fight late payments is being increasingly put on the back foot.”

He added that the promise among some large corporations to shorten supplier payment times is a “step in the right direction,” as is the ombudsman’s inquiry into the issue.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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