COSBOA welcomes Payment Times Register overhaul but “more needs to be done”

faster payments

The Federal Government has stated that it has accepted all the recommendations made by the Emerson Review of the Payment Times Reporting Act, an announcement that has been welcomed by the Council of Small Business Organisations Australia’s (COSBOA) CEO, Luke Achterstraat, who found that majority of the measures, which includes simplifying and streamlining reporting requirements and processes, were practical and supportive of small businesses.

However, COSBOA also stated that future measures will be required to support small businesses. Achterstraat pointed out that in a tough operating environment, timely payment of small businesses was critical not just for the survival of Australia’s 2.5 million small businesses but also for their suppliers and employees.

“Every time a small business is not paid on time there is a blow to productivity, efficiency and time spent by the owner to chase payment. This hurts the small business itself but also has a flow-on effect to their contractors, suppliers and undermines business investment and growth. There is also increasing evidence that late payments impact the mental health of small-business owners,” he said.

Achterstraat said the government must lead by example in providing more government tenders to small business and paying them on time.

“We welcome efforts that ensure payment times are considered in the development of relevant government policies, including unfair trading practices reforms, eInvoicing and procurement,” Achterstraat said.

According to data from the Payment Times Register, only three out of 10 big businesses pay their small-business customers within 30 days, while nearly one-quarter take more than 120 days to pay up.

It is noteworthy that, despite the findings and the calls of several stakeholders, the Emerson Review did not recommend introducing a compulsory maximum time for small business payment.

“The government made an election commitment to ensure small businesses are paid on time and to ensure a mechanism for payment within 30 days,” Achterstraat commented. “Further work will be required to fulfil this commitment and there is a clear role for the Australian Small Business and Family Enterprise Ombudsman to support better outcomes. We need to maintain a collaborative approach to continuously improve payment times, including promoting that seven- and 14-day payment times are desirable, not just 30 days.”

Achterstraat added that the government may need to consider a further examination of compulsory maximum payment times in the future.

“Just as the government has identified wage theft as a priority issue, non-payment and late payment of small businesses and contractors must receive ongoing focus,” he said. “As the government looks to tighten tax collection from small business and increase the frequency of superannuation payments, it is critical that policy levers that promote cashflow to small businesses are continuously monitored and improved.”