Gov Under Pressure On Payment Times

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) is calling on the Australian Government to legislate to set a maximum payment time for big businesses to pay their small business suppliers.

The ASBFEO has released findings from its Inquiry into Payment Times and Practices in Australia, finding widespread evidence of a growing trend for Australian and multinational companies to delay and extend payments to their suppliers with typical payment times of 30 days moving out to 45, 60, 90 or 120 days.

Small Business Ombudsman, Kate Carnell, said, “Extending payment times for suppliers effectively uses the businesses in the supply chain as a cheap form of finance. Something must be done. Small business should never have to act as a bank for big business, helping to finance multinational companies."

Ms Carnell said the growing trend for extended payment times slows down the flow of cash through supply chains, which limits growth of businesses because they have more capital tied up in financing their operations. This practice is raising the costs for smaller businesses who are having to finance longer trade credit to their suppliers.

“When a business experiencing extended payment times is also hit with late payments, it stresses the business further, which can easily put them out of business. Poor cash flow is the primary reason for insolvency in Australia.”

The ASBFEO recommended that the Australian Government adopt a payment term limit of 15 business working days by July 2018 to set an example for faster payments to suppliers.

Ms Carnell said the standard government payment term was 30 days and a study in the United States had demonstrated that faster payments through supply chains had increased annual payroll by $6 billion and created more than 75,000 additional jobs over three years.
If the Government were to take this on board and legislate reasonable payment periods, this could make a very real and tangible positive impact on the Australian economy. 
Go get 'em Kate!

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