Late payments set to improve under new deal
Crippling late payments could become ancient history for Australia’s two million small to medium-sized companies (SMEs) following an exclusive new partnership announced today.
Data and analytics firm illion has joined forces with accounts receivable and collections platform ezyCollect, giving businesses the power to recognise and monitor whether a customer is likely to honour their debts on time, before signing up with them or issuing new orders.
Globally, late payments cost small and medium sized businesses $US3 trillion , indicating the significant drag that tardy payers have on the cash flow, and viability, of entrepreneurial ventures.
Small businesses are the engine room of the Australian economy, accounting for 33 per cent of Australia’s GDP, employing more than 40 per cent of Australia’s workforce, and paying about 12 per cent of total company tax revenue.
However, they are typically also at the mercy of tardy larger companies who employ more than 500 employees, who on average fail to pay their debts on time by 14 days, 55 per cent longer than smaller organisations with fewer than 20 workers.
This may help explain why four out of five small businesses fail in the first 18 months of operation .
illion CEO Simon Bligh said knowing whether a prospective customer is likely to pay on time could be the difference between a company succeeding or failing.
“Onboarding a new trade customer can typically take businesses up to five days as their accounts team check the trade references the customer supplies. Under the new illion/ezyCollect partnership, that time-consuming process can be reduced to as little as 10 minutes,” Mr Bligh said.
“It’s not right that the majority of Aussie firms and their cash-flows are dependent on when other businesses get around to paying them. It is the complete reverse of the Aussie fair-go.
“Together, illion and ezyCollect will give more businesses easy access to the powerful information they need to establish whether a prospective customer is a good, indifferent or bad credit risk.”
ezyCollect CEO AJ Singh said under the new partnership his customers would see a late payments risk gauge for every trade customer managed on their ezyCollect platform, based on regularly updated commercial data and predictive scores from illion.
“Imagine being the first to know—not the last to know—that your customer is in danger of defaulting,” he said.
“A key question from suppliers when they open a new trade credit account for a customer is ‘Will they pay us on time and how much credit shall I extend?’ Credit risk insights alleviate some of that doubt so that businesses know who they’re trading with.
“These credit insights put suppliers in the driver’s seat when it comes to cash flow. Around 95 percent of the customers we surveyed told us that they would consider changing their credit terms with customers on the late payments high risk list.”