Speaking after the Business Council of Australia 2018 annual dinner, accounting software provider MYOB chief executive Tim Reed said the government’s push to pay small businesses within 20 days was a “fantastic commitment” to the industry.
“For the Prime Minister to aim his government toward paying small businesses within 20 business days is a fantastic commitment in itself, but to work through the Council of Australian Governments and make sure all state governments follow this aspiration is better than I’ve seen anywhere else in the world,” said Mr Reed.
“Decisions like this, and a directive for businesses to increase their payment term transparency to small businesses and reduce payment time to less than 20 days, is what will lead to the next wave of substantive change.”
However, not everyone believes this goes far enough, with the Institute of Certified Bookkeepers executive chair Matthew Addison calling for payments to be processed within hours by mandating e-Invoicing.
“Why should it take government 20 days to process a requirement to pay funds for a legitimate and approved obligation?,” Mr Addison previously told Accountants Daily.
“We call on the government to mandate that government departments only receive e-invoices and that they only issue e-invoices to be implemented by June 2019.
“Using contemporary technology that receives an e-invoice, we should then have a process to authorise and then pay within hours and not within 20 days.”
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) are currently reviewing payment times and the effect they have on small and family businesses.
“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.”