Payment Practices Barometer Australia

Barómetro de Prácticas de Pago

  • Australia
  • Agricultura,
  • Automoción/Transporte,

01 nov 2014

When questioned about the biggest challenges to their business profitability this year, 36.2% of Australians responded that maintaining adequate cash flow was their key challenge.

Survey results for Australia

The greatest challenge to business profitability this year

Australia’s most important trading partner is China, accounting for more than a third of its exports. But as China’s demand for iron ore, coal and other minerals has slowed alongside its construction industry, recent months have seen a 4% decrease in Australian export trade with China. Of further note, the slump in demand has caused a 12% drop in Australian commodities prices. So Australia’s businesses, which escaped the global financial crisis relatively unscathed, now face harder times.

When questioned about the biggest challenges to their business profitability this year, 36.2% of Australians responded that maintaining adequate cash flow was their key challenge, more or less in line with the Asia Pacific regional average of 35.6% This was followed by falling demand for products and services, at 29.6%, understandable in the face of the Chinese slowdown.

However, this figure was aligned with those of other Asia Pacific participants which suggests that the Chinese slowdown is impacting many of its neighbouring trade partners. This seems to be more of an issue for Asia Pacific at 32.3% and Europe at 32.2%, than the Americas where only 26.5% of respondents cited this as a big challenge.

Past due receivables and uncollectables

Australian respondents were slightly more impacted by past due receivables and uncollectable invoices than average, which affects businesses negatively not just in terms of time, but also cash flow. In Australia, 37.4% of respondents receivables extended past due. This compared an average of 36.2% for the region overall. With 5.6% of the overdue money extending past 90 days overdue and 2.5% uncollectable Australians experience an above average rate of very late and unpaid receivables. The averages for the region are 4.4% more than 90 days overdue and 2.2% uncollectable. Whilst Australian businesses can ill afford to have money tied up in the face of slowing export trade to China, improving payment success could be critical to success for many of these businesses.

 Also of note, by comparing the percentage of receivables that remained outstanding after 90 days past due, to that of the uncollectable receivables, we can conclude that on average, businesses in Australia lose 44.6% of their receivables unpaid at 90 days. By country, this is the third lowest of the Asia Pacific nations surveyed, with China leading at 64.1%.

Days Sales Outstanding – DSO

Australian respondents were amongst the most relaxed when questioned about the point at which their DSO becomes a problem for the sustainability of their business. 69% of respondents said it became an issue after thirty days, versus a high from China of 78.9% - attributable to their attitude towards trading on credit, something relatively new to them – and at the other end of the spectrum, 61.2% of respondents from Japan, were relatively unconcerned.

However, Australian respondents also had one of the lowest DSOs, at 31 days, well below the 54 day average for the region and shorter, even, than the average payment term for Asia Pacific. According to Australian respondents 76.1% of monies owed were paid within 0 to 30 days, the highest of all the countries we surveyed. Hong Kong had the second lowest DSO, at 69.5%. Overall, DSO seemed less troubling to Australia’s respondents than in most other nations and regions we surveyed, perhaps attributable in part to China’s careful attitude towards trading on credit, which could work in the Australian’s favour.

Main reasons for late payment from B2B customers

Insufficient availability of funds was the most common reason given for late domestic payments across all nations surveyed in Asia Pacific, with the exception of Japan. 43.26% of Australian respondents stated that this was the main issue they faced, with inefficiencies of the banking system second at 28.09%, and the buyer using outstanding debts or invoices as a form of financing at 25.84%.

The story was fairly similar in the case of late payments from overseas customers, with 31.48% citing lack of available funds, 29.63% attributing it to the buyer using outstanding debts or invoices as a means of financing. Somewhat surprisingly 28.7% of respondents cited the invoice being sent to the wrong person as the reason for late payment, the highest amongst all nations surveyed with the exception of India at 29.89%, and compared to a regional average of 22.15%. This may be due to something as simple as having Asian trading partners who are using a different language or alphabet.

Credit management policies used by respondents

71% of Australian business respondents said that they took measures to mitigate the risk of payment defaults by their buyers. Of these, the most common measure taken was to request for secured forms of payment, at 44.6%. Despite this, they were some way down the ranks for doing so, with only Hong Kong at 37.5% and Japan at 25% beneath them. In line with the responses of the businesses we surveyed in Asia Pacific, however, checking a buyer’s creditworthiness and monitoring their buyer’s credit risks were the other two measures chiefly taken.

Amongst the different methods of payment, Australian respondents expected to see the biggest increase in the use of Pay Pal as a means of payment.45.07% of respondents thought it would increase in popularity, whilst the greatest predicted drop was in the use of cheques at 45.37%. This is illustrative of the general trend across the region, where online purchasing continues to increase in line with the rest of the world and the most secure means of payment hold significant appeal.

Disclaimer y Buró de Entidades Financieras

Este informe se presenta, con fines de información únicamente y no está pensada como una recomendación en cuanto a las transacciones particulares, inversiones o estrategias en modo alguno a cualquier lector. Los lectores deben tomar sus propias decisiones independientes, comerciales o de cualquier otro tipo, con respecto a la información proporcionada. Aunque hemos hecho todo lo posible para garantizar que la información contenida en este informe sea obtenida de fuentes confiables, Atradius no es responsable por los errores u omisiones, o por los resultados obtenidos del uso de esta información. En ningún caso Atradius, sus corporaciones o empresas relacionadas, afiliadas y subsidiarias, ni los socios, agentes o empleados, serán responsables por cualquier decisión o medida adoptada con base en la información en este informe, o por ningún daño directo, indirecto, especial, incidental o consecuente, resultante del uso de la información de las declaraciones hechas en este documento. BURÓ DE ENTIDADES FINANCIERAS ¿Qué es el Buró de Entidades Financieras? Es una herramienta de consulta y difusión con la que podrás conocer los productos que ofrecen las entidades financieras, sus comisiones y tasas, las reclamaciones de los usuarios, las prácticas no sanas en que incurren, las sanciones administrativas que les han impuesto, las cláusulas abusivas de sus contratos y otra información que resulte relevante para informarte sobre su desempeño. Con el Buró de Entidades Financieras, se logrará saber quién es quién en bancos, seguros, sociedades financieras de objeto múltiple, cajas de ahorro, afores, entre otras entidades. Con ello, podrás comparar y evaluar a las entidades financieras, sus productos y servicios y tendrás mayores elementos para elegir lo que más te convenga. Esta información te será útil para elegir un producto financiero y también para conocer y usar mejor los que ya tienes. Este Buró de Entidades Financieras, es una herramienta que puede contribuir al crecimiento económico del país, al promover la competencia entre las instituciones financieras; que impulsará la transparencia al revelar información a los usuarios sobre el desempeño de éstas y los productos que ofrecen y que va a facilitar un manejo responsable de los productos y servicios financieros al conocer a detalle sus características. Lo anterior, podrá derivar en un mayor bienestar social, porque al conjuntar en un solo espacio tan diversa información del sistema financiero, el usuario tendrá más elementos para optimizar su presupuesto, para mejorar sus finanzas personales, para utilizar correctamente los créditos que fortalecerán su economía y obtener los seguros que la protejan, entre otros aspectos. Puedes consultar la información relativa al Buró de Entidades Financieras, tanto de Atradius Seguros de Crédito. S.A., como de todo el sector asegurador en el siguiente enlace: http://www.buro.gob.mx