Payment times within the building sector in Australia have improved as better building conditions see more cash flowing down the construction chain.
In its latest report, financial services and credit reporting firm illion (formerly Dunn & Bradstreet) said average timeframes for late payment within building and construction had fallen from 14.4 days in the September quarter of 2016 to 13.0 days in the September quarter just passed.
This means building has overtaken communications and moved from being the ninth best performing sector out of thirteen reported on to being the eighth best paying sector.
This happened amid a broader trend of improving payment timeframes overall.
Across all sectors, average late payment timeframes fell from 13.9 days to 12.6 days – the lowest level on record for five years.
The portion of invoices being paid on time has increased from 60.0 percent in January to 66.9 percent in September.
Large companies continue to be the worst payers.
On average, companies with 500 or more workers paid their invoices 17.9 days late – far higher than the 12.1 days paid late by small businesses.
In its report, illion said part of the improvement reflects greater awareness about the importance of prompt payment.
In November, the Commonwealth Government announced a commitment to reduce payment times for Commonwealth contracts worth less than $1 million from thirty days to twenty days – though it balked on a further recommendation from a Small Business and Family Enterprise Ombudsman Inquiry to require head contractors to adopt payment times and practices of the Commonwealth Procurement Policy through its supply chain.
In Many, the Business Council of Australia issued a new Australian Supplier Payment Code.
Payment timeframes have also been helped by stronger business conditions, the report said.
But construction industry debt recovery specialist Anthony Igra questions the thirteen-day timeframe reported by illion in respect of the building sector.
Late payments within the sector, Igra says, are typically a matter of months rather than thirteen or fourteen days.
Whilst there has been an improvement in timeframes, Igra says this is more to do with greater cashflow flowing through the chain through improved business conditions as opposed to better payment behaviour.