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22 November 2017
Faster payments a 'game changer' for small business
The Australian Small Business and Family Enterprise Ombudsman has welcomed the Federal Government’s move to introduce 15-business-day payment terms for small business suppliers.
The Government today announced the plan in its response to the Ombudsman’s April 2017 Inquiry into Payment Terms and Practices.
The report found that late payments have been a perennial problem for businesses in Australia.
Ombudsman Kate Carnell said the Government’s response showed leadership and a willingness to lead by example.
“This is a game changer for small businesses and family enterprises that provide goods and services to the Government,” Ms Carnell said.
“Cash flow is king for small business and this will make a huge difference.
“It will save money on interest payments, boost confidence and free up capital for reinvestment.”
Ms Carnell said overseas experience showed significant benefits from faster payment times.
Her inquiry report cited the European Union, which estimates that each day of reduction in late payment times saves European companies approximately 158 million euros in financing costs.
In the United States, a study showed that faster payments to businesses had created 75,000 jobs and $6 billion in wages growth.
Ms Carnell said she hoped the Federal Government’s initiative would inspire similar responses from states and big business.