The greatest increase among entire industries was in the Non-food Retailing sector, which increased from 56 days to 57 days. The Agriculture, Forestry and Fisheries industry has maintained its position as the fastest paying sector, taking just 51.5 days on average overall, while the Insurance industry takes only three days longer, with all sizes of company in the sector reducing their payment times by one day over the last six months. But, on average, large companies have not improved over the last six months and, two years after the late payment legislation was introduced, are still taking an average of 76 days to pay their suppliers, with some taking considerably longer. While some companies delay payment of invoices to aid their own cash flow in difficult times or have a dispute with the supplier, others have no justification. Cashflow, profits and growth can all be adversely affected.
Late payment can, and frequently does, lead to business failure and job losses.
Payment terms are an important negotiating tool and can be used with price to strike a deal that is satisfactory to both parties. However, we would advise companies to examine their standard credit terms and, if possible, take steps to reduce them to a more prudent level. 1998's payment legislation recognises 30 days as the norm. In addition, they should take steps to avoid late payment by finding out as much as they can about their customers before they supply any goods and services on credit. They can do this by checking their credit worthiness and payment record to find out how quickly they pay their bills.