An Australian cross-industry study has suggested that business-to-business consumers in the IT market take the longest to pay their overdue receivables, on average, supposedly causing a drain on cash flow for the industry.
The Payment Practices Barometer Australia, conducted by credit insurer Atradius, surveyed 200 Australian businesses and proposed that the Australian IT industry’s B2B customers on average paid their invoices up to 30 days after the invoice due date.
According to the study, about 55 percent of the value of IT B2B invoices arrive overdue. Atradius ANZ managing director Mark Hoppe said this finding was a cause for concern.
“The Australian ICT sector is currently experiencing financial difficulties. The industry has generated the largest proportion of overdue B2B invoices according to our survey. Around 55 percent of the total value of B2B invoices issued by suppliers in Australia to B2B customers in the ICT industry were paid late,” he said.
Extending lines of credit is a risky prospect in business. In the channel, distributors are usually the backers that extend credit to partners, enabling them to service their customers on big deals.
Darren Adams, ANZ vice president and general manager of global distributor Avnet, told CRN working with supplier and business partners to ensure seamless payment and collection processes in light of any cash flow challenges was important to the distie.
“As we move into the world of next-generation technologies it will become even more important that organisations understand the changing nature of credit and the up- and down-stream effects that this has on our industry,” he said.
“Recent examples of disruption continue to dominate not only our industry but throughout the business world in general.
“Our focus will remain on the business fundamentals to ensure that we are generating returns for all of our stakeholders; customers, suppliers, employees and investors.”
The report suggested other industries surveyed, such as consumer durables, construction, metals and mining, energy and business services traded mostly on credit terms when it came to B2B transactions.
While customer liquidity constraints was among the reasons for late payments, 45 percent of suppliers across the industries surveyed, not including construction, expressed the opinion that B2B customers delayed payment of invoices intentionally as a form of business financing.