Back in July we wrote an article called “Late Payers in the Australian Market.” It was about big businesses delaying their payments to smaller business, effectively damaging their cash flow and making it very difficult to remain financially viable.
Many small businesses we speak to are concerned about the unstable state of the economy and the late debtor payment issues that have been recently making headlines. There has never been a more nerve-wracking, yet more exciting, time to grow your business. However, cash flow seems to be one of the hindrances to this growth.
Big businesses using their market dominance to crowd out smaller businesses by delaying the payment of their invoices is something we touched upon in an earlier blog post. 30 day terms are being extended to 60 days and even 90 days in some circumstances, and this can be tough for the majority of small businesses who feel the brunt of the unfair terms.
If you are an Australian business owner using personal finances to fund your business, know that you are not alone. In fact, two-thirds of all small business holders use private funds to help them keep their business afloat.
In a report published this week by the Australian Securities and Investments Commission, 79% of insolvencies were experienced by small businesses with 20 employees or less. And the grand majority of those, approximately 85%, had assets of $100,000 or less proving once again that small businesses are not safe from insolvency, liquidation or closure.