The federal government has boasted that the vast majority of its payments to SME suppliers are now being paid within 30 days, as measures to attack late payments appear to be gaining traction.
As the issue of late payments continues to simmer, Small Business Minister Michael McCormack suggested the federal government is leading by example, with 96 per cent of invoices now being paid within the standard 30-day period.
He said this is an important milestone for the roughly 6,800 small businesses that have contracts with the federal government.
“I am thrilled almost 60 per cent of invoices up to $1 million are being paid within 20 days, smashing the required payment terms by around a third,” Mr McCormack said.
“Having owned and operated my own small business I know how important it is to be paid on time - cash flow is king.
“The government is leading the way for payment culture in Australia and this is a marked improvement from 2002 when only 82 per cent of invoices were paid on time.”
Mr McCormack’s comments come just weeks after the government moved to introduce 15-day payment terms as standard for SME suppliers by July 2018, in a bid to reduce the cash flow burden on smaller businesses.
Recent research by credit agency illion found that it is not just government making headway in reducing payment terms, with average late payments recording a noticeable fall in the first quarter of FY2018.
“Timely payments are a crucial sign of business health. They are critical to small businesses running on slim margins, reducing the risk of job cuts and business failures,” said illion CEO Simon Bligh.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.