Why advocating on time payments for SMEs is a win-win for all

We welcome the Australian Small Business and Family Enterprise Ombudsman’s recommendations to ensure large businesses pay small-businesses promptly. At the same time, it’s important that any solution adopted by legislators for on time payments for SMEs is fair, reasonable and achievable.

A one-size-fits-all approach to payment deadlines – whether it be 15 days or 30 – could inadvertently hurt the very people we’re trying to help. Layers of regulation and red tape add costs to small businesses, which can lack the time and money that compliance reporting requires.

What’s important is that businesses are paid in the same amount of time that they are expected to make a payment. On time payments and predictable cashflow are vital to not just small companies but the larger economy. For this reason, we have been an advocate of a voluntary code, monitored by the ombudsman’s office, that encourages small and large businesses to make payments promptly.

Naturally, it will take time for lawmakers to act on today’s ombudsman’s recommendations. In the meantime, we urge all small businesses take steps now to get paid faster. That means taking advantage of the best technology.

Today’s report recommends the adoption of e-invoicing to streamline administrative tasks and payment practices. And our own data has found that businesses using payment technologies such as Stripe and Paypal are getting paid 27 per cent faster than those those using offline invoices.

Small businesses employ half of all Australian workers and generate a fifth of gross domestic product. The recommendations in the ombudsman’s report are a positive first step, and we will remain advocates for an achievable payments framework from Canberra. As goes small business, so goes Australia.

Trent Innes, Managing Director, Xero Australia

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