‘Case for legislating faster payment times is strong’

On Wednesday, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell has said that if big businesses continue to flout reasonable payment terms, she will have no choice but to recommend federal legislation requiring all businesses to be paid in 30 days.  

Welcoming the news, Xero small-business advocate Angus Capel said the tech giant agrees that the economic case for legislating faster payment times is strong.

“We would welcome any legislation to ensure small businesses are paid within a 30-day period,” Mr Capel said.

“We agree with the ombudsman the economic case for legislating faster payment times is strong. For too long, small businesses have carried the burden of big businesses not being able to pay invoices on time.”

Xero Small Business Insights data recently revealed that $115 billion in payments from large businesses to small businesses are paid late each year, hampering cash flow and growth opportunities.

“The arrival of e-invoicing in Australia this year means we now have the technology solution to deliver faster payment times from big business to small business,” Mr Capel added.

In the past week, both Telstra and Rio Tinto have moved to 20-day payment terms for SMEs, after they faced scrutiny for engaging technology to push suppliers to shave their invoices in exchange for prompt payments.

Given their policy reversal, Ms Carnell has opined that “there is no reason why other big businesses can’t do the same”.

“Australia’s big businesses have had more than enough chances to do the right thing, so if they can’t follow Telstra and Rio’s lead, I will have no choice but to recommend legislation requiring 30-day payment terms across the board,” the ombudsman said.

Last week, the small business ombudsman slammed the Supplier Payment Code, explaining that not only is the definition of small business wide open to manipulation, the code itself is unmonitored and unenforceable.