Late payment overhaul needs 30-day mandate: COSBOA
The government should treat late or non-payment to small business like wage theft, key body says.
A key small business body has applauded the government’s pledge to improve small business payment times but warns that “further work will be required”, including the introduction of 30-day time limits, to level the playing field with large businesses.
Council of Small Business Organisations Australia (COSBOA) CEO Luke Achterstraat welcomed the government’s reforms to the Payment Times Reporting Scheme announced this week, which included a pledge to “name and shame” non-compliant large businesses.
“Every time a small business is not paid on time there is a blow to productivity, efficiency and time spent by the owner to chase payment. This hurts the small business itself but also has a flow on effect to their contractors, suppliers and undermines business investment and growth,” he said.
“There is also increasing evidence that late payments also impact the mental health of small business owners”.
The reforms were based on recommendations made by a review of the scheme by Dr Craig Emerson, which was released in August.
Mr Achterstraat said the government’s measures to simplify and streamline the scheme’s reporting processes were “practical” for the country’s 2.5 million small businesses, which faced an unfavourable economic environment.
However, he said the government would need to go further than the Emerson report to implement compulsory maximum payment times.
“Several stakeholders” called for the review to recommend imposing time limits on payment times, but this did not form part of the final report presented to the government, he said.
“The government made an election commitment to ensure small businesses are paid on time and to ensure a mechanism for payment within 30 days. Further work will be required to fulfil this commitment.”
According to data from the Payment Times Register, only three out of 10 big businesses paid their small business customers within 30 days, while nearly one-quarter took more than 120 days.
Payment within seven and 14 days should also be promoted through a “collaborative approach to continuously improve payment times”, he said.
“Just as the government has identified wage theft as a priority issue, non-payment and late payment of small businesses and contractors must receive ongoing focus”.
“As the government looks to tighten tax collection from small business and increase the frequency of superannuation payments, it is critical that policy levers that promote cash flow to small businesses are continuously monitored and improved”.
In a statement on Tuesday, Small Business Minister Julie Collins said fixing payment times was a “matter of fairness”.
“These initiatives will level the playing field to ensure small businesses are paid on time,” she said, announcing that the government would commit $8.1 million over four years to overhaul the Payment Times Reporting Scheme to “ensure continuous improvement in payment practices by large businesses operating in Australia”.
About the author
