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WA firms hold off paying bills: survey

The impact of the global financial crisis has caused Western Australian businesses to hold onto their cash longer, prompting a rise in the number of days to pay bills, a survey has found.

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Waikiki WA
As a business consultant, I get to see a range of businesses in action and I can categorically state that many do not deliberately delay payment to their suppliers. However, what can happen is that their clients delay paying them and do not seem to understand that if many clients delay, to an SME, this can be a disaster in terms of cashflow management. By the way government appears to be the worst sector for delaying payment; inflexible payment terms of at least 30 days or more whereas commercial clients will accept 7 to 14 days, and no understanding of how late payment can cripple an SME. Larger businesses have more clients and therefore can smooth out the delayers, SMEs often rely on a smaller pool of clients and thus only need a couple to be out of sync with expected payment to then push that effect on through the SME and its suppliers. The lack of ability to negotiate working credit in this downturn to keep a good business ticking over till clients pay up does not help. Better still how about reducing business overdrafts/loans/credit card fees and charges? Credit rather than cash really does make the world go round.

Leederville
The delay is nothing new. D&B's results have varied between 55 and 59 days for years. The best solution for SMEs with good clients (those who always pay eventually) is to work with a provider of invoice discounting or factoring. They pay you 85% of the value of your invoices within 24 hours of the invoice being raised. It costs a little more than an overdraft but is a strong value proposition that ensures cashflow is maintained. We have worked for years with Benchmark Debtor Finance and never had a problem. A.Lee

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