The Australian Small Business and Family Enterprise Ombudsman Kate Carnell is encouraging small businesses to have their say on a draft law requiring big businesses to be more transparent about their payment times.
Today the federal government opened consultation on the draft Payment Times Reporting Framework legislation that will require businesses with a turnover of more than $100 million to publish information about their payment policies.
Minister for Employment, Skills, Small and Family Business, Senator Michaelia Cash, said the new Framework is essential to encourage fairer and faster payments for small and family businesses.
“Slow or deliberately delayed payment times have a significant impact on small business cash flow and viability. This will be a landmark reform which will encourage fairer and faster payment times for small businesses,” Minister Cash said.“Big businesses pay their small business suppliers late more than 50 per cent of the time. There is simply no excuse for that.”
ASBFEO Carnell agreed: “Cash flow is king for small businesses and we welcome the federal government’s continued efforts to ensure they are paid on time.”
The proposed framework will require big businesses to be upfront about the time it takes for them to settle small business invoices. The ombudsman hopes this transparency will business owners in making a more informed choice in who they choose to work for or supply services to.
“The legislation will apply to about 2,500 large Australian businesses, including foreign companies and government entities,” explained Carnell.
Currently, small business owners are missing out on billions in working capital as big corporations delay payments.
“Late payments by large businesses to small businesses account for 53 per cent of all invoices, according to data from Xero. That’s $7 billion of working capital that Australian small businesses are missing out on every year – money they could be using to grow their business.
Carnell is urging all small business owners to come forward and have their say.
“Small businesses can now provide their feedback on this proposed reform which is designed to drive cultural change in business payment performance across the economy.”
Consultation on the draft legislation is open until 6 March via https://consult.industry.gov.au/