The federal government has announced a range of initiatives to swing the balance toward small-to-medium-enterprises, after alarming reports which put Australia near the bottom of the international pack.
The Small Business Ombudsman found Australian payment times were the worst in the world, with invoices paid on average 26.4 days beyond the 30 day global standard.
Big businesses will have to publish their payment times annually and governments are being pushed to direct business to the smaller end of town.
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“We identified a growing trend for large Australian and multinational companies to delay and extend payments,” said Ombudsman Kate Carnell.
“These companies pay slowly because they can, little businesses have no choice but to deal with them.
“In Australia we tend to have a fairly solid concentration of big business, like supermarkets, transport companies and so on.
“Really, they’re using little businesses as their bank.
“The impact on rural business is significant. Often their businesses’ are mums and dads, family businesses. And they have to make their payments to staff weekly or fortnightly, their landlords, suppliers and the Tax Office.”
The Prime Minister announced new rules for small business paydays this week
- Large businesses over $100 million turnover must publish payment information, covering 3,000 enterprises including foreign companies and government entities
- Minimum 35 per cent of all government contracts up to $20 million to assigned to small businesses
- By July 2019 federal government invoices to small businesses worth over $1m to be paid within 20 days
- Big business that secure government contracts must pay invoices to small businesses worth over $1m within 20 days.
- Mr Morrison called on all states to follow the lead of NSW and adopt this practice
Ms Carnell said the requirement for large businesses pay small to medium enterprises within 20 days as a condition of future government contracts is a major win.
“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, she said.
She also welcomed the government’s commitment to pay invoices under $1 million within 20 days and to help SMEs compete for 35% of all government contracts up to $20 million.
“This will deliver a significant increase in the amount of government work going to small-to-medium-enterprises, which will increase capacity and innovation in the sector.”