Late payments a way of life for SMEs

Almost half of Australian small businesses have paid invoices late in the past year and close to 20 per cent pay their suppliers late on a regular basis.

A survey of small businesses (with a turnover of up to A$2 million a year) conducted by Lonergan Research for Commonwealth Bank found that late payment is recognised as a standard business practice in Australia, even though it puts cash flow pressure on businesses.

Seventy-six per cent of small businesses that offer credit terms said they were paid late. Sixty-two per cent of all outstanding debts are overdue.

Small businesses said large companies used their size to negotiate payment terms that were unfavourable to SMEs.

Commonwealth Bank's executive general manager of local business banking, Adam Bennett, said the bank would use the research to make sure it had the right tools to assist SMEs.

The bank has tracking tools that allow SMEs to understand their cash flows. It has everyday settlement.

Bennett said the bank promoted regular business health checks.

"We look at the development of the business and the finance they have in place. As the business changes, the optimal finance changes," he said.