Research carried out for Kiwibank has revealed that New Zealand’s small businesses are owed $2.5b in unpaid invoices each month, with staff spending 18 million hours a year chasing them.
The survey this month of 411 Kiwi businesses with 19 or fewer staff shows that 67% of them are waiting for payment on overdue invoices each month. Two thirds of companies ask for payment on terms that fall within a month of an invoice being issued.
Across the 455,907 business in this category there is a monthly average of just under 7 overdue invoices. The average value of each invoice is $823, making a total of $2,553,079,200 unpaid across the nation each month.
Reasons for unpaid invoices include customers who are regularly slow (61%), cash flow problems (47%), delays in the administration (30%), disputes about the work undertaken (17%), and customers going out of business (14%).
Unpaid invoices also affect productivity. A business owner or staff member has to contact debtors at least twice to get them to pay. This takes the equivalent of a week each year in someone’s time for each business.
That means that across New Zealand, the owners or staff of businesses are collectively spending 18 million hours a year trying to get invoices paid.
Kiwibank’s head of Business Banking, Mark Stephen, said the economy could perform better if people paid bills speedily.
“Unpaid invoices cause cash flow problems, which make it tougher for companies to stay in business. That has serious consequences for New Zealand.”
“Eighteen million work hours a year is wasted just getting people to pay their bills. That’s time which would be better spent selling more goods and services,” he said.
Contact: Bruce Thompson, Communications Manager, Ph: 04 – 460 6831
Conducted by Perceptive between 14-20 September 2013. Completed online by 411 business owners / decision makers in companies with 19 or fewer staff, and those involved with collecting payment and invoices within a business. Results have a margin of error of 4-5%.