Australian coal mine suppliers hit by late payment terms

Trade credit insurer Atradius has found that on average, Australian businesses are more exposed to late payment more than their Asia Pacific counterparts.

According to the Atradius Payment Practices Barometer 2015, 18% of Australian respondents indicated that their business invoices were unpaid three months or more past the due date.

This is almost double the rate of the Asia Pacific region as a whole, in which 10% of invoices remained unpaid 90 days or more after they are due.

ANZ Atradius managing director Mark Hoppe said: “This is a surprising figure, given that most Australian exporters are in the habit of making their credit terms generally shorter than companies in other markets within the Asia Pacific. This should be an incentive for buyers to pay on time, yet the opposite seems to be happening.”

The Atradius Barometer found that Australian respondents’ payment terms for domestic and foreign business-to-business customers averaged 20 days, whereas the average credit terms for the Asia Pacific region as a whole were 33 days.

At the same time, 94% of Australian respondents reported having experienced invoice late payment over the past year, four per cent higher than the Asia Pacific average.

Hoppe said: “Given these findings, it’s no surprise that nearly half of the survey respondents in Australia expressed the opinion that the risk of payment delay and payment default from business-to-business customers has increased over the past six months.”

Seventy-eight per cent of Australian businesses offered trade credit terms for their customers over the past year. This is lower than the Asia Pacific average of 91%.

“These findings show that implementing stringent credit terms does not necessarily protect businesses against late payment. Whether terms of credit are 20 days, 30 days, or 50 days, there is still a high proportion of invoices that remain unpaid long after the due date has expired,” Hoppe said.

“To protect themselves from the increased risks of selling on terms of credit, trade credit insurance provides a final line of defence that will keep a business going if all else fails. This way, businesses can trade more confidently in the broader market and be more flexible with their credit terms.”