Is Your Cash Among the $19 Billion Locked Away in Accounts Receivable?

Large businesses take advantage of their power, putting strain on the cashflow of their small suppliers. Culture of late invoice payments takes its toll on the small business sector. Find out more on the Grapple Blog.

Published: 21/02/2018

Invoice payment terms remain lengthy, while small businesses struggle to survive.

According to research done by the Australian government, 90% of small business failures are due to cashflow management issues. Small businesses represent the overwhelming majority of all businesses in Australia, which means that if more can survive and prosper, Australia as a country can benefit from their success. Large businesses continually take advantage of their power to extend invoice payment terms to 60, even 90 days. Even when reasonable invoice payment terms are agreed, many will not pay on time, making it impossible for small business owners and managers to plan ahead, leaving them to scramble for cash when it’s time to pay their own bills. A study by Dun & Bradstreet has shown that more than $19 billion is estimated to be locked away annually in accounts receivable of small businesses beyond the reasonable 30-day payment term. Although the government has researched this problem, it has yet to take any steps to promote prompt payment.

What can businesses in this situation do to improve their cashflow standing?

Of course, business owners do have ways to manage cashflow, such as credit lines, business loans and invoice factoring, but these can be very expensive and add an unnecessary level of bureaucracy to business management. For example, invoice factoring comes with high fees, locks you into a long-term contract and can interfere with your customer relationships , all of which is undesirable for a small business owner. There are more flexible options for cashflow finance available in Australia. Look out for a debtor finance service that will allow you to finance single invoices, charge low, pay-as-you go fees and provide confidentiality. This way, the business owner can focus on providing top-level products and services instead of expending time and energy on managing the finance provider.

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Grapple is a disruptive peer-to-peer invoice financing marketplace that allows businesses to finance their invoices for as little as 1%, with payment being received in less than 48 hours from registration. Grapple’s technology seamlessly and quickly matches your invoices with investors for financing at a competitive rate.