PM’s payment time plan ‘a major win for SME sector’, says ASBFEO

The PM’s announced policy push to pressure big businesses to pay their bills on time as a condition of future government contracts is “a major win for the SME sector”, the Australian Small Business and Family Enterprise Ombudsman said.

Prime Minister Scott Morrison announced at a Business Council of Australia event on Wednesday that the country’s 3,000 largest businesses will be required to publish information on how they pay small businesses.

The Prime Minister said that large businesses will have 20 days to execute payments to small suppliers as a condition to tender for federal government contracts.

“The announcement by the Prime Minister last night to ensure large businesses pay small to medium enterprises (SMEs) within 20 days as a condition of future government contracts is a major win for the SME sector,” Australian Small Business and Family Enterprise Ombudsman Kate Carnell said.

“Backed up by the requirement by large businesses with $100 million turnover to publish payment times in their annual reports, it is definitely a game-changer.”

Ms Carnell noted that this is already a requirement in the UK, adding that it is “important that Australia learns from the UK experience to ensure compliance and transparency”.

“We are mid-way into a review on payment times and thousands of SMEs are telling us through our online survey that late and extended payments are affecting their cash flow and ability to sustain their businesses,” she said.

“SMEs make up 99 per cent of businesses in Australia and they employ over of our workers.

“Just one late payment makes a difference to a small business’ bottom line and we are finding some small businesses have up to 20 companies extending their payment times or just paying late, which is unacceptable.”

The Ombudsman also welcomed the government’s commitment to pay invoices under $1 million within 20 days and to help SMEs compete for 35 per cent of all government contracts up to $20 million.

“This will deliver a significant increase in the amount of government work going to SMEs, which will increase capacity and innovation in the sector,” she said.

Ms Carnell also called on all state governments to adopt these practices and “invest in our SMEs so they can grow, innovate and boost employment”.

One thought on “PM’s payment time plan ‘a major win for SME sector’, says ASBFEO

  • November 23, 2018 at 2:21 pm
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    I totally agree with the proposal. Australia has one of the worst business debt payment rates for accounts in the world. The Debt date payment rate (I believe called the (Debt Ratio rate) in the early 2000’s was about 47 days with many large businesses and government departments not paying debts for up to 120 days. This has since become worse. Yet these same large businesses and government departments are usually demanding immediate payment or within 7/14 or 21 days. Thus large businesses and government departments are using small businesses as an interest free loan account.
    In Asia, the average days to pay debts was 14-17 days. No wonder Asian countries are successful.

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