A formal review into payment times has been unveiled in a bid to publicly identify the companies that drag the chain on paying invoices to Australian SMEs.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) announced the review to provide a more detailed overview of the implications that late payments have on smaller businesses, following a formal request for detailed information on the problem from Small Business Minister Michaelia Cash.
“In our 2017 Payment Times and Practices Inquiry, we found Australian payment times were the worst in the world, with invoices paid on average 26.4 days late,” Ombudsman Kate Carnell explained.
“We identified a growing trend for large Australian and multinational companies to delay and extend payments from 30 days to 45, 60, 90 or 120 days.
“More recent research involving 1,600 businesses identified the biggest cause of business disputes is payments (44 per cent), with either the full amount not being paid (26 per cent) or not being paid on time (18 per cent).”
In a bid to gather these insights from businesses across the country, the Ombudsman has launched an online survey that Ms Carnell said would only take businesses five minutes to complete.
“We have also written to large corporations requesting a copy of their payment terms and conditions to suppliers,” Ms Carnell said.
The NSW government became the first of the states to improve its payment processes for SME suppliers, unveiling plans to mandate that all small business suppliers to government agencies be paid within five days by the end of 2019.
The move suggests that progress on the issue is likely to continue going forward, as governments and larger companies are increasingly shamed for withholding funds owed to SMEs.
In September, data analytics firm illion suggested that the average length of overdue invoices fell noticeably last financial year to reach 11 days – roughly half the average of almost 22 days that was recorded in 2011.
But while the average number of days invoices owed to SMEs are overdue may be falling, 11 days – or close to two weeks – is still a considerable drag on these businesses.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
- Australian manufacturers can create their own stimulus
- Here’s what separates success from the rest
By Adam Zuchetti
- 5 workplace trends to watch in 2020
By Nicole Gorton