Australian managers have limited knowledge on ways to shield their companies from customers defaulting on their credit payments, according to a study by credit data specialist Veda Advantage and trade credit insurer Coface Australia.

The survey found 57% of the 524 businesses surveyed in October have more than 75% of their revenue on credit terms with customers, and outstanding payments and bad debts are on the increase. 

Despite this exposure, 28% of the financial managers and business owners surveyed have no credit management systems in place. A further 32% of companies said debt collection is the most important credit management tool. 

Coface Australia GM Christian Vollbehr says businesses should implement proactive credit approval procedures to help minimise business risk.

“While we applaud Australian businesses for their positive attitudes and increasing business confidence, we recommend they proceed with caution and don’t let their guard down,” he said.

Around half of the businesses surveyed have more than 75% of their business transactions on credit, leaving them exposed to any market fluctuations.

The survey found sole traders are the worst offenders with late payments and debt collection. Financial difficulties, mainly related to cash flow, were cited as the main reason.