CreditorWatch founder Colin Porter told AccountantsDaily that while late payments remain a huge issue for SMEs, government regulation is not the answer.
“It’s fanciful, that’s the only way to describe it. Who would oversee it and what would the ramifications be? It’s never going to happen,” Mr Porter said.
“It’s just not realistic to think the government would introduce a system to force companies to pay on time,” he added.
CreditorWatch is one of just three credit reporters in Australia, and the only one exclusively targeting the untapped SME market.
“Many small businesses don’t have an accounts department, they don’t have credit managers, they don’t have the level of sophistication that larger businesses have, but there are some very simple processes that small businesses can put in place to help them[selves],” Mr Porter explained.
He said while cloud software has helped equip SMEs with some of the necessary accounting tools, they still need to ensure they are paid on time.
“Small businesses now are given a lot of the helpful tools in accounting software that only [large] companies had just a few years ago,” he said.
“The Christmas period is the time particularly where businesses’ clients postpone payment, which leads to cash flow problems during January and February, and that’s why March is such a notorious period for businesses to collapse.”