Announced last November, the Australian Federal Government plans to introduce a national payment register that would force large businesses to report on how long it takes them to pay their suppliers. This move, which would give small businesses the opportunity to ‘vet’ a potential relationship based on the company’s previous history, has been welcomed by the small business community; where late payments remain a key cause of cashflow stress.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell says it’s imperative that the scheme is accessible for small businesses and that the information can be used to compare different firms.
The Department of Jobs and Small Business is asking for views relating to six sets of questions revolving around; the scope of the reporting, what information including payment terms and performance is going to be most useful to SME’s, and how the information should be reported.
Late payments lead to huge financial and mental stress
Minister for Small and Family Business Michaelia Cash said payment practices, including the practice of building discounts into contracts, also remains an issue.
“One of the issues consistently raised with me as Minister for Small and Family Business has been payment practices,” Cash said in a statement.
“Reports that some large businesses push out payment terms to 60 or even 120 days, or demand discounts just for paying on time, place huge financial and mental stress on business owners.”
As we all know, financial stress is often very much part of running a small business and the effects of cash flow instability can be wide reaching. Not only because waiting for 60 days or more for invoices to be paid can cripple the business, but also because any squeeze on the business is also likely to be felt in their personal life too (particularly if assets are tied up with the business).
We support any initiative that challenges those that have been responsible for meting out unfair payment terms to smaller suppliers and encourage you to take the opportunity to contribute your opinion.
At this stage, almost every aspect of the policy is up for discussion as the government looks to inform its view on how to move forward. For more information there are links to the discussion paper and submission form below.
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The discussion paper:
Make a submission here: