Cash flow squeeze is bad for business

by Caroline Dann18 Jul 2012

Poor cash flow is to blame for small businesses being unable to pay bills on time, says a new report.

Dun & Bradstreet’s June Trade Payments Analysis found overhead costs – including loan repayments – are taking longer than 30 days to pay, which is a “bad sign for the economy,” according to Dun & Bradstreet director Adam Siddique.
It's yet another hurdle for small businesses, their brokers and lenders, as the commercial landscape in Australia becomes tougher.
“We have witnessed a number of high-profile failures during the past 12 months, in part a result of cash flow issues related to slowing demand and higher operating costs. This is obviously impacting business payment terms,” he said.
The report found a 16% drop in small businesses being able to pay bills on time.
Conversely, it saw an increase in larger firms making payments within 30 days.
“It is particularly concerning that SMEs are waiting longer to be paid, and as a result are taking longer to pay their own bills. 
“Trade credit constitutes a significant and critical portion of non-banking finance. When this is delayed, it withholds millions of dollars from businesses and the wider economy,” said Mr Siddique.
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