Earlier this year, the ASBFEO released its report, Payment Times and Practices Inquiry, putting forward a recommendation for the government to adopt the 15-business-day payment time by July 2018.
The report found that late payments have been a perennial problem for businesses in Australia, with 26.4 days being the national average before payments were made.
The inquiry report cited the European Union, which estimates that each day of reduction in late payment times saves European companies approximately 158 million euros in financing costs.
In the United States, a study showed that faster payments to businesses had created 75,000 jobs and $6 billion in wages growth.
ASBFEO Kate Carnell welcomed the government’s decision to push forward with introducing shorter payment times.
“This is a game changer for small businesses and family enterprises that provide goods and services to the government,” Ms Carnell said.
“Cash flow is king for small business and this will make a huge difference.
“It will save money on interest payments, boost confidence and free up capital for reinvestment.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.