Credit squeeze hits corporate Australia: Transfield Services blames $250 million loss on customers not paying on time
Thursday, August 29, 2013/
Corporate Australia is feeling the cash squeeze, with Transfield Services yesterday saying its cash flow has been hit by people not paying their bills on time.
It’s the second large, ASX-listed company in two weeks to highlight this as a challenge in its results.
The construction and maintenance group yesterday unveiled a $254 million loss for the 2013 financial year, which includes $296 million of write downs on the value of assets bought during height of the mining boom.
Chief financial officer Tiernan O’Rourke said the loss was at least partly due to late-paying debtors.
“Many customers are delaying paying for work contracted as long as possible, particularly around [financial] year end,” he told analysts yesterday. “There is strong evidence all Australian companies are finding the cash cycle at its worst for decades.”
This follows the results of construction company Leighton Holdings two weeks ago, which were also hampered by late-paying clients.
In its half-year report, Leighton labelled its trade receivables – that is, work done but not yet paid for – as “unacceptable”. It was owed $600 million for work completed but yet to be paid for on June 30.
It’s an issue that’s hit SMEs as well as corporate Australia.
Data released by Dun & Bradstreet earlier this month found businesses are now taking 54 days to settle their accounts.
D&B chief executive Gareth Jones told SmartCompany that this leads to a “vicious” cycle.
“When one business pays late, it can force the other to delay its own payments until it has money available. This pattern appears to be at play within the business community at the moment.”
The data shows retailers and mining companies kept their creditors waiting the longest – 57 days – followed by utility companies, who avoided payment for an average of 56 days. The fastest businesses to pay their debts were in the transport sector, where the average was 50 days.