Only three out of 10 big businesses pay their small business customers within 30 days while nearly one-quarter take more than 120 days to pay up, according to new payment times data.

“This is a woeful performance and is bitterly disappointing news for small and family businesses to start the year,” said the Australian Small Business and Family Enterprise Ombudsman, Bruce Billson.

“Nearly one-quarter of big businesses taking four months or more to pay their bills is just not acceptable and there is little sign of improvement by the worst performing businesses.

“This needs to be taken more seriously. Finance is the oxygen of enterprise. Cash flow is vital to these small and family businesses. There is abundant scope for big businesses to lift their game and they should.”

The Payment Times Reporting Regulator has released the latest data on payment performance of more than 7000 big businesses, many with a turnover of more than $100 million.

Analysis of that data by the ASBFEO reveals there has been virtually no improvement by big business over the past six months. It shows:

• 24% of big business take more than 120 days to pay their small business suppliers
• 9% take between 61 and 90 days to pay
• 36% take between 31 and 60 days to pay
• 18% take between 21 and 30 days to pay
• 13% pay their bills in fewer than 20 days

Big businesses operating in manufacturing, construction and retail trade sectors recorded the worst performance in paying their small business suppliers.

• Only 15% of manufacturing businesses paid their small business suppliers within 30 days.
• Only 18% of big construction businesses paid small business within 30 days.
• Only 24% of big businesses in retail trade paid small businesses within 30 days.

The best performers were big businesses operating in public administration and safety, but it was still only just over half (51%) of small business invoices paid within 30 days.

The Payment Times Reporting Regulator, Mary Jeffries, noted in the Regulator’s update accompany the data: “It is concerning that register data indicates payment terms and payment performance have not materially improved since the commencement of the scheme”.

Mr Billson said he welcomed Ms Jeffries’ call to improve payment times, as the update also notes: “Because payment practices have not improved across recent reporting periods, we will also explore how the register can be used by small business suppliers, investors, advisers, supply chain managers and other stakeholders to incentivise improved payment performance by large businesses”.

Mr Billson said about 40% of the requests for assistance to the ASBFEO relate to payment times.

“A vast number of big businesses just aren't meeting the mark and it's causing needless harm and cashflow challenges for small and family businesses who are waiting too long to have their invoices paid,” Mr Billson said.

“At a time when small and family businesses are facing headwinds, big business can play their part.

“Small and family businesses have kept their side of the deal by providing goods and services, so big business should do the right thing and pay bills in a timely fashion.

Mr Billson praised the 13% of big businesses who paid their bills in fewer than 20 days.

“Those ‘top of the class’ businesses deserve to be acknowledged for that better practice that they're leading. But we just need the broader business community to get the simple message - good business pays,” he said.

“We saw during COVID that some of our larger business prided themselves on paying small business suppliers in a handful of days. These exemplars deserve positive recognition with scope to report a ‘less than 7 days’ or ‘within a fortnight’ payment times performance.

“Delaying the timely payment of your small business suppliers just puts pressure on other parts of the economy when cashflow is critical for those smaller enterprises and is nothing more than a crude display of power imbalances.”

Mr Billson said initiatives such as eInvoicing enabled faster payment times and were significantly cheaper to process than other payment methods.

Mr Billson said he looked forward to the review announced late last year by the Australian Government of the Payment Times Reporting Act, which is being chaired by former minister Dr Craig Emerson.

It is looking at ways to improve payment times and terms for small businesses and will consider the introduction of mandatory payment times.

ASBFEO’s analysis of the payment times data is based on big business entities who have paid 80% of their invoices within a given timeframe.

ASBFEO’s analysis excludes entities who have not paid invoices to small businesses in the reporting period. These entities account for nearly one-quarter of records on the Payment Times Reports Register.

The Register includes original reports and their revisions. ASBFEO’s analysis uses the most recent available report for each reporting period. It excludes original reports if a revision has occurred. 

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