Earlier this year, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO ) released its report, Payment Times and Practices Inquiry, putting forward a recommendation for the government to adopt the 15-business day payment time by July 2018.
The report has found that late payment is a perennial problem for businesses in Australia, with 26.4 days being the national average before payments are made.
Close to one in 10 businesses have reported receiving payments more than 60 days late.
The inquiry report cites the European Union, which estimates that each day of reduction in late payment times saves European companies approximately €158 million in financing costs.
In the United States, a study shows that faster payments to businesses have created 75,000 jobs and $6 billion in wages growth.
ASBFEO’s Kate Carnell welcomes the government’s decision to push forward with introducing shorter payment times.
“This is a game-changer for small businesses and family enterprises that provide goods and services to the government,” she said.
“Cash flow is king for small business and this will make a huge difference.
“It will save money on interest payments, boost confidence and free up capital for reinvestment.”