Small businesses struggling with late payments
Kiwi small businesses are struggling as they wait for an estimated $7.4 billion in overdue payments, Xero has revealed.
The Wellington-based tech company, which provides software for small businesses, based the estimate on anonymous data drawn from a sample of its more than 350,000 users in New Zealand.
Data from the April-June quarter revealed that on any given day, more than 50 per cent of small businesses on its platform are owed at least $7000.
Half the overdue invoices were on average at least 16 days past due, and still pending payment.
What’s worse, the average amount of overdue invoices per firm increased from 12 to 13 year on year in Q1, and the number of small businesses reporting late payments rose from 77 per cent in March to 79 per cent in June.
“Small business need this money to pay suppliers, staff, rent and other bills – and over time that can take a toll,” Craig Hudson, Xero’s MD for New Zealand and the Pacific Islands.
“Weak cash flow doesn’t just impact the financial stability of a business, there’s the human impact too, with financial stresses affecting employment, families and mental wellbeing.”
Accommodation and food service businesses were the most affected by late payments, with overdue invoices comprising 32.5 per cent of all their invoices – compared to 28.5 percent for all industries.
“They each had an average $9,586 overdue in Q1, which is smaller than other industries but significant when you consider they’re usually very small, often family-run, and typically making little profit,” Hudson said.
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