A review of payment times is set to measure how late or extended payment practices impact small and family businesses
The Australian Small Business and Family Enterprise Ombudsman, former pharmacist Kate Carnell, has announced a review of payment times.
She did so after the Minister for Small and Family Business, Skills and Vocational Education, Michaelia Cash, wrote to her for advice on how these practices affect small business.
“In our 2017 Payment Times and Practices Inquiry, we found Australian payment times were the worst in the world, with invoices paid on average 26.4 days late,” Ms Carnell said.
“We identified a growing trend for large Australian and multinational companies to delay and extend payments from 30 days to 45, 60, 90 or 120 days.
“More recent research involving 1600 businesses identified the biggest cause of business disputes is payments (44%), with either the full amount not being paid (26%) or not being paid on time (18%).
“Partial and late payments, seeking discounts to pay in 30 days, offering loans to cover extended terms, all place stress on the cash flow of small businesses. It forces the business to find ways to finance the shortfall in their working capital.”
The review is commencing with a five-minute survey for small and family business owners to fill out, available here.
“We have also written to large corporations requesting a copy of their payment terms and conditions to suppliers,” Ms Carnell said.
“Extended payment times for suppliers effectively uses the businesses in the supply chain as a cheap form of finance.
“Too many small and family businesses are being crippled by slow payments and the national economy suffers as a result.”
A spokesperson for the Pharmacy Guild said it welcomed the review of payment times.
The Guild “will be encouraging our members to respond in the survey if they wish to report areas of concern about payment times,” said the spokesperson.