Victoria’s Small Business Commissioner is urging Australia’s largest corporations to sign up to the Australian Supplier Payment Code (ASPC) following the release of a review of the code today.
The findings of the review highlight the issue of late payments as a perennial problem for Australian businesses. The review found a need to attract many more signatories, particularly entities with large numbers of small-business suppliers in their supply chains. Currently, there are 101 signatories to the code representing an annual revenue of $550 billion. The Victorian Government is the only state to have signed up to the code to pay small businesses within 30 days.
Recent research on payment terms between large corporations and small business found Australia ranked behind 18 other countries, with significantly longer payment days.
The key recommendations from the review included:
Commissioner Judy O’Connell said, “The review highlights the importance of paying small-business suppliers on time. It is disappointing that only around 50 of the Business Council of Australia’s 140 members, representing Australia’s largest corporations, are currently signatories.
“I encourage those businesses that haven’t yet signed the code to take the initiative and look after the small businesses in their supply chain. Paying small business on time and within 30 days removes the stress of worrying about how to get their expenses paid, as well as helping them maintain healthy cashflows and employ more people. It is critical for a thriving economy.”
A recent survey conducted by Small Business Commissioners and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) found around one in two businesses reported more than 40 per cent of their invoices were paid late last year. More than half reported always receiving late payments by large/multinational businesses.
ASBFEO, Kate Carnell, said ,”The actions recommended in the independent review of the Business Council of Australia (BCA) Australian Supplier Payment Code are a step in the right direction, but have fallen short of small business expectations. We support the establishment of a register of small businesses with a turnover of less than $10 million and with easily referenced ABNs.
“We agreed if that is not feasible, a large business register should be established and identify small businesses by exception. We also support a maximum of six months to achieve full compliance with the code. What is missing from the review is there is no mechanism to check compliance, such as standard reporting,” Ms Carnell added.
“While large businesses with $100 million turnover will be captured by the new government requirement to publish payment information annually on a reporting framework, those with a turnover less than this will be overlooked. Adoption of the code needs to increase, particularly by BCA members.”
In May 2017 the Business Council of Australia and the Victorian Government launched the ASPC. The code is a voluntary initiative to ensure that small-business suppliers are paid on time and within 30 days of receiving a correct invoice.
Any business, not-for-profit or government organisation can sign-up to the code at any time. The code also obliges large companies to help small-business suppliers implement new technologies and practices that will assist them with more efficient invoicing and payment.
The VSBC is an independent government agency advocating on issues affecting small business, helping small business learn about their rights and responsibilities and avoid or resolve any disputes.