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Australian firms are prompt on payment

AUSTRALIAN companies are among the fastest payers of sales invoices, an international survey has found.

The average payment period by Australian firms was 36 days, according to accounting firm Grant Thornton’s International Business Owners Survey.

The only country where payment was faster was Russia, where the average period was just 24 days.

This was attributed to the still widespread practice of cash on delivery.

The survey of 6,000 businesses in 19 countries found that the average payment period was 47 days.

The worst offenders were countries in southern and western Europe.

Businesses in Italy and Spain both took an average of 80 days to pay sales invoices.

The survey included 250 Australian businesses with 20 to 200 employees.

Among the Australian firms 40 per cent paid invoices in less than 30 days, 58 per cent paid between 30 and 90 days, and 2 per cent took more than 90 days.

The survey report noted that “countries where payment is prompt does not necessarily reflect any legislation that compels companies to settle sales invoices in a particular time.

“And where legislation has been enforced such as in the EU, although there has been improvement, companies are still not being paid as quickly as in other parts of the world.

“The lesson is that it is good business practice, which leads to prompt payment.”

The survey also found that “in general, the picture is very similar whether we look at payments made to suppliers or receipts from those invoiced.

“This suggests that independent businesses are not being squeezed by larger companies.”

Another topic covered by the survey was business funding.

It found that Australian firms led the world in the use of leasing and hire purchase and overdrafts.

70 per cent of Australian firms used leasing and hire purchase, compared with a global average of 48 per cent.

Similarly, 68 per cent of Australian firms used overdraft finance, well above the global average of 36 per cent.

At a global level, the main forms of business finance were loans under five years (59 per cent), leasing and hire purchase (48 per cent), loans of more than five years (42 per cent), overdrafts (36 per cent) and owner’s funds (33 per cent).

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