Business-to-business (B2B) customers in the Information and Communications Technology (ICT) industry take the longest to pay overdue receivables; on average, within 30 days after the invoice due date, according to a nationwide survey by Atradius. This long payment period is causing a drain on cash flow for the industry.

The Payment Practices Barometer Australia 2016 canvassed the opinions of 200 Australian businesses during the second quarter of 2016.

Mark Hoppe, managing director, ANZ, Atradius, said, “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 per cent of the total value of B2B invoices issued by suppliers in Australia to B2B customers in the ICT industry were paid late.” (1)

Other industries, such as consumer durables, construction, metals and mining, energy, and business services, are mainly trading on credit terms with B2B customers.

Mark Hoppe said, “Invoice payment terms extended to B2B customers in the metals industry appear to be slightly above the national average, averaging nearly 30 days from the invoice date.

“Based on survey responses, late payment of invoices due to liquidity constraints from customers occurred most often in the construction industry. 53 per cent of suppliers surveyed in Australia mentioned this. However, around 45 per cent of the suppliers in all the other industries surveyed expressed the opinion that B2B customers delay payment of invoices intentionally as a form of business financing.”

Most Australian suppliers expect no change in B2B customers’ payment practices in the metals industry. Half of the Australian suppliers trading on credit with B2B customers in the chemicals and the construction industries do not anticipate any change in the payment behaviour of their B2B customers over the next 12 months either.

67 per cent of suppliers in the metals sector and around 40 per cent of suppliers in the ICT industry believe there will be no change in their customers’ payment behaviour in the next 12 months. In the ICT industry, more suppliers (58 per cent) expect an improvement than a worsening (10 per cent). The transport industry is the only industry where more Australian suppliers expect a worsening in B2B customers’ payment practices (30 per cent of suppliers) than an improvement (six per cent).

Mark Hoppe said, “All businesses need to protect their cash flow. If payment behaviours stay the same or get worse, it will become more difficult for businesses to maintain a strong enough cash flow to keep their operations sustainable. In these cases, it may be advisable for businesses to consider trade credit insurance to safeguard their cash flow.”

The full report Payment Practices Barometer Australia 2016 is available at https://atradius.com.au/reports/payment-practices-barometer-australia-2016.html