To be run until June 2021, the trial extends the existing faster payments policy to ensure larger companies within the NSW government pay their suppliers within 20 business days.
The NSW government has previously committed to faster payment times down the supply chain, introducing the NSW Faster Payments Policy in 2018 that ensures small businesses directly contracted by the NSW government are paid in five business days.
Responding to the NSW government’s pilot program, small business ombudsman Kate Carnell said it was a “very encouraging” development for small businesses.
“Fast-tracking payments to small businesses is the best way to help them recover after what has been an incredibly tough 12 months,” Ms Carnell said.
“This initiative will benefit small business suppliers and will also flow through to the broader economy.
“We know that small businesses, particularly those hardest hit by the COVID crisis, urgently need cash flow.”
Ms Carnell cited the latest CreditorWatch data that showed businesses are being paid on average 26 days overdue, saying that it is absolutely devastating for them and highlights the importance of paying small businesses on time.
“The NSW government’s faster payment program for small business suppliers should be considered the benchmark for governments at all levels. If NSW can do it, there is no reason why it can’t apply across the board,” she said.
“Big businesses should also be doing the right thing by their small business suppliers by paying on time and ensuring they are complying with the Payment Times Reporting Scheme which came into effect on 1 January 2021.”