The Federal Government has released a new discussion paper to help gather input from business owners about the best ways to target business-to-business late payments that cause cash flow problems.
The government is seeking feedback from business owners to its Prompt Payment Protocol discussion paper with the aim of developing a new approach to improving small business cash flow and strengthen business relationships.
Research conducted by Dun & Bradstreet estimates that an average of more than $19 billion annually is locked away by businesses that don't pay accounts from other businesses within 30 days. The research suggests that on average Aussie businesses take over 50 days to pay their commercial trade bills.
Parliamentary Secretary for Small Business Bernie Ripoll said the release of the discussion paper will encourage businesses of all sizes, in all sectors to have a conversation about late payments.
“The protocol will encourage good payment practices between businesses without introducing extra red tape,” he said. “Over time small businesses will have confidence in the certainty of payment when dealing with protocol signatories. Any business – big or small – that signs up will be able to use the goodwill from making a public commitment to promote themselves as business leaders in prompt payment, building greater trust and sustainability.”
The discussion paper is seeking feedback from both large and small businesses on the protocol and how best to implement this new initiative across the whole economy. While it remains to be seen just what this discussion will lead to in terms of easing day to day cash flow concerns of SME business owners, it is certainly a discussion worth having and SME business owners are strongly encouraged to make their views known.
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