|The average late payment time for an Australian business fell to a record 11.0 days during FY2018, according to illion’s latest analysis. The June quarter average represents a 24.9% annual drop, down from 14.6 days in the prior corresponding period, while the percentage of businesses paying their bills on time was 70%.
The illion report said that late-payment times resumed their long-term downward trajectory in FY2018, having increased during the preceding 18 months. A healthy cash flow is important to all companies, but even more so for small business, so an improvement in late payments across sectors and regions is a positive sign for the Australian economy.
Commenting on the results, illion’s Economic Advisor Stephen Koukoulas added: “A strong cash position in the business sector has seen late payment times fall 25% through FY2018 to a record low. A solid pace of economic growth, low interest rates and low wage costs are giving firms ample cash reserves to pay their accounts in a timely manner.
“Record low interest rates and low wages growth are leaving most businesses cash rich, even if the average level of firms selling prices remains contained. It is noteworthy that the decline in late payments in recent years reflects broadly the decline in interest rates over those years.”
Tasmania is the quickest region for paying overdue invoices, with an average time of 8.5 days. The ACT remains the slowest-paying region, although it made a significant dent during the year, cutting its late payment average by 35.4% to 12.1 days.
Late payment times fell across all sectors in FY2018, with construction and communications industries standing out among major industries for significant reductions of 26.2% and 28% respectively.