The Gold Medal for late payments goes to … Australia.
Australians love being gold medal winners. We follow our athletes at the Commonwealth and Olympic Games with feverish intensity. They receive a hero’s welcome when they arrive home, with ticker-tape parades and thousands of people cheering. As a nation, we are happy to spend millions of dollars on elite sports so we can all bask in the glory of being at or near the top of the medal tally.
Unfortunately, there is another gold medal that Australia holds that is absolutely nothing to be proud of.
The Gold Medal we should not be proud of.
Australia is the world leader in late payments of their supplier’s invoices. It’s true. We earn the gold medal because, on average, Australian businesses pay 26.4 days late. It’s then clear daylight to the silver medal winner, Mexico. If this were a swimming final, the huge winning margin would be the headline on every news bulletin. Mexicans manage to pay their invoices 18.6 days late. Back in the bronze medal position is South Africa on 16.5 days.
Anyone who has started their own business in this (or any other) country knows that no matter how amazing your product or service is, some customers just seem to have long pockets and short arms. In other words, they don’t seem able to reach into their pocket to pay you.
And, just as in sports, it’s usually the big names that take home the gold. The latest data shows that our biggest Australian companies are by far the worst offenders. Companies with more than 500 employees pay on average 17 days late. And that’s just the “late” period – these companies typically have longer payment terms as well – up to 120 days.
So what can a small business owner do about late payments?
Here’s my 5 tips for getting paid faster.
Make sure your invoice is absolutely correct.
Do you need to quote a Purchase Order number? Have you used the correct company name and ABN? If not, it will make its way back to you for correction, further delaying your payment.
Send a copy to your company contact.
Always make sure that the person you deal with in the company gets a copy of your invoice as well as the Accounts Payable Department. If something goes wrong, they can help you track down the problem.
Phone a friend.
Before you start your contract, find an ally in Account Payable who will be able to shepherd your payment through the system if something goes wrong.
Check the payment terms.
Many large companies have terms that say something like “…45 days after the end of the month in which the invoice is approved”. If you find this in your payment terms, put some real effort into getting your invoices out before the end of the month. If you don’t, you’ve just added an extra 30 days to your waiting time.
Get the format right.
Do they want a detailed invoice or just one line? Do you have to quote part numbers or item numbers? If your invoice falls foul of the computer system, you will face “Computer says NO”, and be stuck in limbo for quite some time waiting for payment.
These five tips won’t cure the bad behaviour of big companies that habitually pay late and use their small suppliers as a “free” bank, but they will help you get your well-earned money a bit closer to the time it is owed to you. Let me know if you see any improvement.
By Bronwyn Reid
22 September 2018
Image Credits: Depositphotos