As reported by My Business in the wake of the 2017 federal budget, momentum has been building for standard payment terms to become regulated by federal law, to bring an end to practice of large companies holding their smaller parts to ransom.
However, in a surprise move amid inaction from major political parties, Greens senator Nick McKim appears to be leading the charge on the matter.
Senator McKim told The Sydney Morning Herald that big companies, as well as governments at all levels, are effectively treating SMEs as “little piggy banks”, which is why he has unveiled plans to introduce a bill requiring all invoices to small businesses.
Calls to Senator McKim’s office to verify the statement and track progress of the proposed bill went unanswered.
Andrew Conway, CEO of the Institute of Public Accountants (IPA), welcomed news of the bill, pointing to the benefits not only for SMEs but for the broader economy as well.
“The IPA has long advocated for responsible timely payment to small businesses. Too often, small business cash flow is held to ransom by the failure of big businesses to pay small business invoices in a timely manner,” he said.
“The commercial world is still lagging behind government agencies which are required to pay within 30 days or else interest must be paid.
“Healthy cash flow provides ongoing incentive to reinvest in their businesses, which extends the economic benefit of growth and the capacity to employ.”
According to Mr Conway, the proposed legislation would cover contracts between a business with less than $10 million annual turnover and a business of $25 million or more annual turnover, and would require the latter to make full payment within 30 days.
It is the latest step forward on the issue of late payments, following the Business Council of Australia announcing in late May the establishment of the new Australian Supplier Payment Code.
Under the voluntary code, 32 large companies operating in Australia – including the big four banks, Telstra, Qantas and Rio Tinto – committed to paying smaller suppliers within 30 days of receipt of a correct invoice.
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