“The announcement by the Prime Minister last night to ensure large businesses pay small to medium enterprises (SMEs) within 20 days as a condition of future government contracts is a major win for the SME sector,” the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell said today.
“Backed up by the requirement by large businesses with $100 million turnover to publish payment times in their annual reports, it is definitely a game-changer.
“This is already a requirement in the UK and it is important that Australia learns from the UK experience to ensure compliance and transparency.
“We are mid-way into a review on payment times and thousands of SMEs are telling us through our online survey that late and extended payments are affecting their cash flow and ability to sustain their businesses.
“SMEs make up 99% of businesses in Australia and they employ over of our workers.
“Just one late payment makes a difference to a small business’ bottom line and we are finding some small businesses have up to 20 companies extending their payment times or just paying late, which is unacceptable.”
The Ombudsman also welcomes the government’s commitment to pay invoices under $1 million within 20 days and to help SMEs compete for 35% of all government contracts up to $20 million.
“This will deliver a significant increase in the amount of government work going to SMEs, which will increase capacity and innovation in the sector.
“All initiatives announced last night reflect the recommendations in our 2017 , which identified late and extended payments as one of the most significant handbrakes on small business productivity and a burden on the economy.
“We echo the call on all state governments to adopt these practices; invest in our SMEs so they can grow, innovate and boost employment.”
