In May 2017 the Business Council of Australia introduced a voluntary Supplier Payment Code. The voluntary code called for businesses and corporations to sign up to commit to 30-day payment terms for SMBs. In an era where many small businesses were feeling the pinch and cash flow is a major pain point, the code was seen as a beacon.
The code was about more than prompt payment times. It also obliged big businesses to give a helping hand to smaller ones to implement new technologies and practices to improve their systems to enable more efficient and faster invoicing and payment. The code also required purchasers to pay on time and included a clear and fair process for dealing with complaints and disputes about payment times.
Fifteen months on, businesses are already beginning to see the effects. The code is now the subject of an independent review to gauge its impact on the payment times and pain points of small business.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, who is one of four independent panellists taking part in the review, is encouraging all small business suppliers, government agencies and industry associations to provide feedback.
“We are particularly interested in whether the code has made an impact on payment times since it was launched in May last year. We’d like to know how the code could be better promoted and if any of the code requirements should change,” Carnell said.
“Consultation with BCA members who have not yet adopted the code should give us an insight into any barriers to adopting the code.
Carnell believes more and more small businesses in Australia are falling victim to unscrupulous payment practices of some big businesses and government agencies.
“Given small businesses typically operate on extremely tight margins, all payments should be made in 30 days or less. As any small business owner will tell you, cash flow is king.
“Chasing overdue payments causes stress and anxiety; it’s a waste of time and it stymies growth by forcing the business to focus on surviving rather than thriving,” Carnell said.
Carnell will be working with the independent reviewer, former Australian Competition and Consumer Commission chairman Professor Graeme Samuel, on the review in the next few months.
For information on the review’s terms of reference and how to make a submission, go to www.supplierpaymentcode.org.au