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Small Business Risk Review Q4: CreditorWatch

The latest quarterly Small Business Risk Review from CreditorWatch has revealed payment defaults across Australia continue to remain high with significant year on year increases in the last three quarters of 2016.

The Small Business Risk Review analyses internal and aggregated data, defaults and trade payment data from over 40,000 CreditorWatch members to highlight credit risk and provide insights into businesses of all sizes.

Click here to view the infographic.

Other notable findings from the review show that inter-SME payments are averaging 55.5 days outstanding, while SME to corporate payments are fastest averaging 43.2 days outstanding.

It would suggest that not much has changed in 12 months since a study by UK consultancy firm MarketInvoice found that Australian companies are the slowest in the world at paying outstanding invoices. For their Late Payment Report 2016, they crunched five years’ worth of data - 30,000 invoices from 1,000 companies across 80 countries - and concluded that globally, 72.5 per cent of invoices were paid late.

They also found that the average amount of time it took for an invoice to be paid in Australia was 26.4 days overdue (or 56.4 days outstanding).

In Mexico, the second-worst offender, that figure was 18.6 days overdue. In contrast was Japan where on average invoices were paid 6.5 days early. Other countries where bills were typically paid before the due date included Belgium (4.1 days), the Netherlands (three days), Switzerland (0.8 days), Germany (0.5 days) and Ireland, where debtors on average squeezed in their payments just under two-and-a-half hours before deadline. The study found that SMEs "tend to pay far more sporadically, often very late or very early,” compared to their larger counterparts, suggesting "an ad hoc attitude to payment, or a deliberate delay for the sake of cash flow. There is also the possibility that SMEs are merely passing on a payment problem from the top of the chain.”

Back to the CreditorWatch Review and the payment default findings make for interesting reading. In Q2 2016, data sourced by CreditorWatch's national database of registered defaults showed a 90% increase compared to 2015. In Q3, this figure was 63% and for the December quarter, 67%.

The Review also revealed a growing number of unincorporated entities failing since Q3 2015, while court actions in Western Australia rose (+113%) during the December quarter, following a 175% increase year on year in Q3.

CreditorWatch is a credit data collection service that enables businesses of any size to conduct due diligence on customers, as well as identify, assess and monitor their customers. For more information visit or contact 1300 50 13 12.

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