Under new laws passed last month, a Payment Times Reporting Scheme has been created obliging businesses with a total annual income of over $100 million to report on how and when they pay their small-business suppliers.
The laws also define small business as those that have a turnover of less than $10 million, which covers 99 per cent of all businesses.
“These new laws represent important progress at a time when Australian small businesses are hurting and need to be paid on time to survive,” said the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.
The legislation applies to a total of 3,000 businesses, with Ms Carnell calling upon each and every one of these businesses to “do the right thing” and comply with the payment time reporting requirements as soon as possible.
“Big businesses should act quickly to be up front and honest about the time it takes to pay their small-business suppliers,” Ms Carnell said.
“Delaying compliance until penalties apply would be unacceptable.”
But, although the ombudsman views the Payment Times Reporting Scheme as a step in the right direction, she believes that it won’t solve the problem of late payment times on its own.
“The latest CreditorWatch data for September shows businesses are being paid an average of 37 days overdue — an increase of more than 200 per cent on this time last year. This is having a devastating impact on small businesses, particularly those hit hard by the COVID crisis,” she said.
“That’s why my office continues to call for legislation requiring SMEs to be paid in 30 days. This is the more effective way to drive meaningful change in business payment performance across the economy.
“Cash flow is king for small businesses, and when small businesses are paid on time, the entire economy benefits.”