Research released by bank payments company, GoCardless, reveals the impact the ongoing cost of living crunch is having on the cashflow security of small and medium businesses in Australia.

The report, entitled, ‘Pursuing Payments’, reports that 55% of business leaders are worried that late-paying customers will increase in the next 12 months. This is a major concern, given that 50% of respondents admit they avoid awkward money conversations with their customers.

Additionally, 86% of respondents who have avoided money conversations with customers in the past 12 months say there has been some impact from avoiding such conversations. 19% of respondents estimate their business loses between $6,000 and $30,000 from late payments annually.

Millennial business leaders, women more uncomfortable chasing and discussing payments

Millennials are more than twice as likely as Baby Boomers to agree that they’d feel uncomfortable asking customers for Payment (42% compared to 20%). This suggests a generational gap exists regarding how business leaders operate and interact with customers.

When it comes to feeling ‘awkward’ about money, millennials were also significantly overrepresented in the findings. Three in five (62%) of millennial business leaders agree they’d feel uncomfortable chasing customers for late payments. This compares to 40% of Gen X and 36% of Baby Boomers.

Half of all millennial business leaders also agree they now find it harder to talk about money with customers. 70% of millennials are also concerned the problem of late-paying customers is only set to worsen this year as the cost of living rises.

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Payments confidence gender gap

The data also reveals a gender gap in payments confidence. 29% of women agree they’d feel uncomfortable asking customers for payment. This rises to almost half (46%) when it comes to chasing late payments. However, only 26% of men feel uncomfortable asking for payments and 40% share this experience chasing payments.

Luke Fossett, General Manager, GoCardless said: “Despite some optimism emerging late payments will continue to cause a cashflow crunch for already struggling SMBs in 2024. Businesses need to acknowledge this and adapt quickly to stay on top.

“For those wishing to avoid more uncomfortable money conversations, there are practical solutions. These include avoiding payment options with high failure rates, automating follow-ups on unpaid invoices and offering payment methods that reduce the onus on your customers such as Direct Debit or PayTo, which automatically pull money from a customer’s bank account. For recurring payments, all they need to do is set up the payment once and then forget about it.”

Seeking solutions to the payment nightmare

The report reveals that Millennials and Gen X are at least seven times as likely as Baby Boomers to admit they wouldn’t know how to broach late payments with customers.

Millennials and Gen X (85% and 68%, respectively) are also more likely than Baby Boomers (51%) to be interested in introducing technology. Example include automated invoicing, PayTo, or payment platforms to get paid more quickly.