08 January 2018
Payment performance improves but more needs to be done
The Australian Small Business and Family Enterprise Ombudsman says state governments and multinational companies need to improve their payment times to small business suppliers in 2018.
Ombudsman Kate Carnell said the Federal Government and some big businesses had made significant commitments and lifted their performance in 2017.
The Ombudsman’s office held an inquiry into payment times and practices last year. It found many small businesses were being crippled by slow payments and the national economy was suffering as a result.
In response to her inquiry, the Federal Government announced in November it will introduce 15-business-day payment terms.
Earlier, the Business Council of Australia established the Australian Supplier Payment Code.
It commits signatory organisations to pay eligible Australian small business suppliers on time and within 30 days of receiving a correct invoice.
“That’s great, but not every big business is a signatory, and until my office established the National Payment Transparency Register there was no reporting mechanism,” Ms Carnell said.
“The good news is that two large multinational companies have worked with my office to change their practices and introduce 30-day payment terms for small business suppliers.
“I congratulate Mars Petcare and Lion for being responsible corporate citizens.”
Ms Carnell said there had been overall improvements since her report was published in April 2017.
The latest Dun and Bradstreet report says the “payment culture is changing”.
“The average late payment time for an Australian business was 12.6 days during the September quarter, down 9.1 percent from 13.9 days during the prior corresponding period,” the report says.
Ms Carnell welcomed the positive trend, but warned against complacency.
“We know there are still large companies and State Government departments which pay small business suppliers later than 30 days on a regular basis, sometimes more than 60 or 90 days,” she said.
“That’s not acceptable and the culture in those organisations needs to change.
“I will continue to apply pressure in 2018 to ensure small businesses get a fair go.
“The ball is really in the court of recalcitrant large organisations. If they don’t lift their game there will be calls for legislation to make it happen and nobody in the business sector wants more red tape.”