The review follows a written request by Minister for Small and Family Business, Skills and Vocational Education Michaelia Cash for advice on the effect these payment practices are having on small and family businesses.
Last year, the ASBFEO released its final report on payment times, finding that Australian and multinational companies are increasingly delaying or extending payments to their suppliers from 30 days to 45, 60, 90 or 120 days.
“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.
“More recent research involving 1,600 businesses identified the biggest cause of business disputes is payments (44 per cent), with either the full amount not being paid (26 per cent) or not being paid on time (18 per cent).
“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 short fall in their working capital.”
The ATO recently backed the e-Invoicing initiative to reduce payment times, citing research from Deloitte Access Economics suggesting that it could result in economy-wide benefits of up to $28 billion over 10 years.
“We’ve already heard of people saying we will pay you in 20 days if you do it through the e-Invoicing system. We think that through market pressure as this comes about and the masses join the initiative then we will see the time frame get smaller and smaller,” said ATO director Mark Stockwell.
“There’s about $26 billion worth of unpaid invoices floating around at any point in time so if we can speed that up from a 60, 90, 120 day pay cycle at the moment to a few days, it is going to make a massive difference to the Australian economy.”
Interested small business can fill out a five minute survey on the ASBFEO’s website.