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Small businesses face ruin from unpaid invoices

  • Written by Business Daily Media

Australian small businesses are battling with billions in outstanding invoices, according to Debtplacer, a platform that connects businesses with a marketplace of debt collectors and law firms.


According to a government report, there are more than 2.3 million small and medium-sized enterprises (SME) in Australia.


Businesses are owed an estimated $115 billion a year in outstanding invoices, with up to $9 billion never making it to their bank account.2


That equates to $3,913 in unpaid invoices for every SME in the country. 


James Cook, co-founder of Gold Coast-based Debtplacer, recently left a senior role as a forensic and insolvency accountant to address this issue.


“I was tired of examining the crash site, when I knew I could have helped prevent the accident.


“By the time a case got to me, it was usually too late, but often this loss could have been prevented if the business owner had known where to turn,” he said.


Nearly 1 in 6 (16%) Aussies businesses admit it will be ‘difficult’ or ‘very difficult’ to meet their financial commitments over the coming 3 months, according to the Australian Bureau of Statistics (ABS).3 


That equates to 368,000 small businesses facing potential ruin.

 

James.jpg

Debtplacer co-founder James Cook started the company to help SMEs before the filed for insolvency


Cook said the housing industry provides the most obvious cautionary tale for SMEs who don’t collect quickly.


“There’s a lot of stress in the construction industry at the moment – there’s been a boom, but in some cases a profitless boom.


“I know companies that agreed to contracts 12-18 months ago and are now having to absorb very sharp cost increases, and there’s often no margins left in the job.


“We’ve heard of builders handing back contracts as they’re no longer profitable,” he said.


ABS data show that 277,674 businesses had to close their doors in the 2020-2021 financial year.4  


Cook said waiting for payments can often be a death blow. 


“In my experience, there is a real taboo around debt collection and as a result, too many companies leave it until it’s too late. 


“We started Debtplacer to save SMEs the time, money and the heartache of chasing unpaid invoices.


“We also did it to connect them to the right people to make sure their good work doesn’t go unpaid,” he said.



Sources:

1:https://www.asbfeo.gov.au/sites/default/files/ASBFEO%20Small%20Business%20Counts%20Dec%202020%20v2.pdf

2:https://alphabeta.com/wp-content/uploads/2019/06/190624-xsbi-payments-report-no.4.pdf

3:https://www.abs.gov.au/statistics/economy/business-indicators/business-conditions-and-sentiments/latest-release 

4:https://www.abs.gov.au/statistics/economy/business-indicators/counts-australian-businesses-including-entries-and-exits/latest-release



How Debtplacer works

  • Choose to send a Debt Placement Notice. Debtplacer will contact your customer directly and give them a final 7 days to resolve their unpaid account with you. In the process, Debtplacer will explain the consequences of non-payment and the steps which will follow. Your listing will automatically list to the marketplace of registered, trusted and proven Collection Partners if your debt remains unresolved.


  • List directly to the Debtplacer marketplace. Alternatively, you can choose to list directly to the marketplace for free if you prefer to skip a final notice.


  • Select a Collection Partner. Once listed, review offers from Debtplacer’s network of verified Collection Partners, choose a collection process that’s right for you, and let them do the heavy lifting


  • Get Paid

 

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