A joint campaign by several prominent business figures is calling on major Australian companies to commit to 30-day payment terms, given the problems that late payments cause for SMEs.
Peter Strong, CEO of Council of Small Businesses of Australia (COSBOA) has teamed up with his counterparts Innes Willox at Ai Group and John Brogden at the Australian Institute of Company Directors (AICD) in a bid to counter what they say has become an ingrained culture in Australia’s business sector of paying invoices well past the internationally-accepted standard that is 30 days.
“Not many people are aware of how entrenched this behaviour has become in our business world. It has become increasingly more common for a 90-day payment frame to be included in B2B contracts. In some cases this has extended out as far as 120 days,” says Mr Strong.
“This behaviour has even extended to the payment of individual contractors who, in some cases, are now facing 60 day payment terms. Individual contractors, unlike B2B payments, often rely on this money to live, to pay mortgages and to put food on the table. In these instances, late payments can have a huge impact.”
The trio are pushing for major companies to publicly commit to ensuring they honour 30-day payment terms by June 2018, in a bid to reduce the stresses placed on Australia’s SME community.
It comes as Kate Carnell, Australian Small Business and Family Enterprise Ombudsman (ASBFEO), has launched a formal inquiry into the payment times and practices for B2B payments and the effects late payment has on SMEs.
“Best practice in governance demands that businesses pay on time. Without surety of cash flow it is hard for any business to achieve strong and consistent performance,” says Mr Brogden.
“I believe there is a common desire to fix this problem and for all Australian businesses to pay on time, every time.”
Mr Willox added that their call for 30-day payment terms as a standard was also supported by Australian regulators.
“We should all be getting behind this campaign. Paying on time is the right and fair thing to do,” he says.