The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has urged big businesses to report their payment times to small business suppliers as soon as possible with the Payment Times Reporting Scheme set to come into effect in January 2021.
Under the new measure, businesses with an annual turnover of $100 million and above are required to heed the intention of the legislation early regarding their payment times.
“These new laws represent important progress at a time when Australian small businesses are hurting and need to be paid on time to survive,” Carnell said. “I am strongly encouraging the 3000 businesses this legislation applies to, to do the right thing and comply with the payment time reporting requirements as soon as possible.
“Big businesses should act quickly to be upfront and honest about the time it takes to pay their small-business suppliers,” Carnell added. “Delaying compliance until penalties apply would be unacceptable.”
The Ombudsman stressed that, while she supports the Payment Times Reporting Scheme as a step in the right direction, it won’t solve the problem of late payment times on its own.
“The latest CreditorWatch data for September shows businesses are being paid an average of 37 days overdue – an increase of more than 200 per cent on this time last year,” Carnell said. “This is having a devastating impact on small businesses, particularly those hit hard by the COVID crisis. That’s why my office continues to call for legislation requiring SMEs to be paid in 30 days. This is the more effective way to drive meaningful change in business payment performance across the economy.
“Cashflow is king for small businesses and when small businesses are paid on time, the entire economy benefits,” the Ombudsman concluded.