The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed legislation passed in the Senate to implement the Payment Times Reporting Scheme, requiring big businesses to be transparent about their payment times.
Prior to the coronavirus crisis, late payment times were already crippling small businesses. Independent research by East & Partners on behalf of national small business lender Scottish Pacific found small business owners are waiting on average 56 days to be paid, resulting in up to $776 billion in late payments annually. The pandemic has only exacerbated the problem.
The ombudsman hopes that the Payment Times reporting scheme will force the hand of those big businesses still paying small business owners late.
Carnell says the Bill represents important progress at a time when it is critical small businesses are paid promptly.
“Australian small businesses have been hit hard by the COVID crisis so getting paid on time is key to their survival. This Bill will require businesses with a turnover of more than $100 million to publish information about their payment policies.
“It requires big businesses to be upfront and honest about the time it takes to pay their small business suppliers,” Carnell said.
Carnell says the legislation will require around 3,000 of Australia’s large businesses, including foreign companies to report their payment times. She believes this transparency is essential if small businesses are to survive the current economic situation.
“My office will be invoking the powers we have to investigate any reports of big businesses failing to live up to the information provided on this register once it is implemented.
“We support the Payment Times Reporting Scheme as passed by the Senate, however, Labor’s ‘failsafe mechanism’ amendment would have strengthened the Bill.
“The proposed failsafe mechanism would have allowed the regulator to force big businesses to pay their small business suppliers in 30 days or face hefty fines, but the amendment was unsuccessful.
Carnell says the Payment Times Reporting Scheme is a step in the right direction, but it won’t solve the problem of late payment times on its own.
“Legislation requiring SMEs to be paid in 30 days is the only way to drive meaningful cultural change in business payment performance across the economy. Cash flow is king for small businesses and when small businesses are paid on time the entire economy benefits.”
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