The latest data from the Payment Times Reporting Regulator has found that despite ongoing efforts to reverse the tide, most of Australia’s big businesses are still missing their own deadlines for paying their small-business suppliers.
The report noted that while there has been a marginal improvement in stated payment ambitions, actual payment performance has slipped to the point that even the minimal 30-day payment target has not been met by big businesses.
Australian Small Business and Family Enterprise Ombudsman Bruce Billson described the findings as “incredibly disappointing”.
“I call on the nation’s big business to show leadership, respect and care for our small businesses and to pay their bills on time. Small businesses are not asking to be paid early, just to be paid on time. Put simply, good business pays,” Billson said.
The report noted that only 47 per cent of big businesses paid more than 80 per cent of their suppliers by their own agreed payment deadline and only 31 per cent of big businesses paid more than 80 per cent of their small-business suppliers’ invoices within 30 days, which is the benchmark set by the Business Council of Australia.
“I applaud those companies that are paying on time and particularly those who pay their small-business customers in far fewer than 30 days,” Billson said. “But this report tells us that far too many big businesses are falling well short of paying on time. COVID-19 has made the problem worse. Payment disputes represent 40 per cent of requests for assistance received by our office. Prior to COVID-19, this proportion was around 25 per cent.
“Cashflow is king for small and family businesses and if they are paid on time, the benefits spread through the entire economy,” Billson added. “We must not forget that two out of every five people with a private sector job work in a small business.”
The report also algins with a recent report by CreditorWatch which found the proportion of businesses with payments in arrears by 60 days or more had increased in almost every industry sector.
The Business Council of Australia has recently created a supplier payment code, urging big businesses to sign a pledge to pay small-business customers and suppliers within 30 days.
“Paying small-business suppliers on time is critical to easing stress, supporting their ability to expand, keep healthy cashflows and employing more people,” the BCA said during the introduction of the code.
Billson also suggested that businesses adopt e-invoicing as a way to improve payment times, saying that it “enables more timely payment, cuts the administrative burden and is more secure than posted or emailed invoices, so it reduces the chance of invoice fraud or scams”. He highlighted the fact that out of the approximately 1.2 billion invoices exchanged in Australia every year, 20 per cent are sent to the wrong person and 30 per cent have incorrect information, issues reduced by e-incoicing. And he pointed out that it costs around $30 to process a paper invoice while an e-invoice costs less than $10.
