Latest data shows the government’s scheme has improved average terms offered to small businesses by only 1.7 days in three years.
Collins vows ‘more action’ on payment times
Minister for Small Business Julie Collins has doubled down on her commitment to improve payment times in response to updated data showing just a 5 per cent reduction in term lengths in the three years since the scheme’s introduction.
Average payment terms were down 1.7 days since 2021 and the number of invoices paid within 30 days increased by 3 per cent, according to the reporting regulator’s January update released last week.
Ms Collins said any improvement for small businesses was welcome but the data “underscores the important work still required to make further improvements”.
“While this improvement is welcome, the Albanese Labor government acknowledges small businesses should be paid more quickly, given that cash flow is the lifeblood of small businesses,” she said.
She said the government committed $8.1 million to increase pressure on big businesses by calling out late payers and overhauling the Payment Times Reporting Act 2020 by addressing “inefficiencies” in the regime.
“The new initiatives we have committed to will help to level the playing field to ensure small businesses are paid on time. This is a matter of fairness – big businesses should not take advantage of Australia’s 2.5 million small businesses by failing to pay them on time,” she said.
“I look forward to continuing work this year to deliver more action on payment times for small business.”
Australian Small Business and Family Enterprise Ombudsman Bruce Billson said late payments still happened too often and caused problems to “cascade through the supply chain”.
He said two out of every five help requests received by the ASBFEO related to a payment dispute, recalling one case where a government department paid three months late and another where a company’s subcontractor became homeless due to missed payments.
“Power imbalances make it difficult for a small business to pursue timely payment for their services,” he said.
An independent review of the Payment Times Reporting Act last August slammed the government’s scheme as “unwieldy” and found no evidence of significant improvement in the payment terms and times of large businesses to smaller suppliers.
The report, by economist and former Labor MP Craig Emerson, also found data produced by the reporting scheme was “impenetrable”, limiting media coverage and reputational pressure on late payers.
Payment terms averaged 36.89 days at the start of the scheme’s reporting cycle in January 2021, inching down to 35.81 days at the end of December 2022.
During the same period, the percentage of invoices paid within 20 days went from 43.64 per cent to 47.72 per cent, while payments between 21-30 days went from 19.26 per cent to 19.86 per cent and 31-60 days crept up from 28.4 per cent to 24.69 per cent.