Invoice Payment Times Double as Manufacturing Undergoes Cash Flow Crunch

New data collated by OptiPay reveals a sharp increase in the number of days outstanding for invoices issued, particularly to businesses in the manufacturing industry, from 42 to 58 days in the last six months. This situation is putting extra strain on Australian manufacturing on top of the ongoing inflation and global supply issues it is already facing.

“The typical terms of manufacturing businesses is 30 days meaning on average our clients are being paid 28 days after the due date of their invoices, so nearly double what it should be,” OptiPay CEO, Angus Sedgwick, said. “The ramifications of inflation and global supply issues is constrained cashflow and this is having a knock-on effect for all businesses.

“We’re seeing the problem exacerbated by rising interest rates, the ATO ramping collection activity for unpaid tax from the COVID period and access to capital from traditional sources drying up,” Sedgwick added, warning that the next 12 to 18 months are going to be a challenging time for Australian SMEs and that it is critical that businesses have strong business foundations and a cashflow management plan in order to survive.

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