Jingle Bills: Aussie SMEs to chase $22 billion in unpaid invoices this festive season

Late payments could leave Australian SMEs in the lurch this holiday season with a shortfall of billions of dollars in income, as new research reveals that an estimated $22 billion in invoices are expected to go unpaid by December 25.

A survey conducted by global financial technology platform, Intuit QuickBooks, has found that small and medium businesses across Australia are expecting an average of eight invoices will go unpaid between now and Christmas day.

The pressure of unpaid invoices has been worse than ever this year for 23% of the survey respondents, with 46% stating that unpaid invoices ahead of the festive season are causing them to feel financial strain.

Thirty-nine percent of small and medium businesses spend up to 12 hours a month chasing late invoices and seven in 10 small business owners admit to sacrificing personal time to get on top of business admin according to research by the accounting software platform.

Pawa Catering and Events founder Niyoka Bundle, who founded the Melbourne-based catering company with her husband Victor Manning in 2019, is one of the many Australian businesses currently dealing with unpaid invoices.

“I run a catering company that focuses on using native foods, we provide corporate catering and events to Melbourne and surrounding suburbs. We also have a cafe inside Hamer Hall, along Southbank, which also has a native theme throughout. And then there’s Taka Gin Co, our native fusion gin,” she said. 

Bundle said it was very frustrating to hear from the QuickBooks data that people and companies aren’t paying on time and are not bothered about it. 

“They don’t realise the flow-on effect it has, especially on a small business such as mine,” she said. 

“There are many, many points along the way to the final product being produced, so waiting for a payment can really bring a small business close to the edge of not being able to function.”

Bundle told SmartCompany that off the top of her head, the business has over $40,000 plus outstanding. 

“We send reminder emails, I have to get my office staff to take time out of what they are doing to chase up overdue invoices,” she said.

“Our expenses are very high during this time, due to Christmas parties and end-of-year events. 

“So not being paid on time is hard as we have to pay staff, suppliers, and our outgoing costs can be quicker than incoming. 

“We need to pay staff for holidays and annual leave at this time of year, so not having our payments come in fast is very stressful.”

Bundle said sometimes she needs to access capital funding.

“As it can be hard to rely on being paid when you aren’t paid on time,” she said. 

“And then if we need to pull off a very large event, paying our suppliers, plus tax plus super is something that can get out of control, so having some room to breathe is why we have to access some funding here and there.”

The research also reported that 32% of small and medium businesses reported that they had to use their own personal funds to cover cash shortfalls when paying suppliers due to missing invoices.

Intuit QuickBooks Accounting and Advisor Group Lead Damien Greathead said small businesses are vital to Australia’s economy, contributing over $500 billion to the nation’s GDP.

“It’s concerning to hear how exposed our SMEs risk being this holiday season, facing challenges with income and cash flow at such a busy and expensive time of year,” he said.

“It’s an overwhelming predicament which SMEs currently find themselves in – time poor, trying to keep on top of admin while running a business and getting paid on time to keep on top of bills.”