COSBOA notes that yesterday afternoon the Payment Times Reporting Scheme legislation was passed in the Senate.
This is great news for small businesses.
COSBOA CEO Peter Strong said “being paid late is a huge stressor for small business people, who then may not be able pay their staff, their contractors (who then may not be able to pay their staff either), or even the tax office on time. It’s not something big businesses and government departments should take lightly.”
The new legislation will take effect in January 2021 and require large companies to report their payment times publicly. COSBOA understands that the Government is also working on a web portal for big businesses to identify their small business suppliers and allow them to report on their payment performance.
Mr Strong said “If large businesses are made to be transparent about their payment times, small business owners can decide for themselves what payment times they can manage and avoid being caught off guard. This is an important step in addressing the problem and it will be interesting to see the results.”
Late payment times has been a major advocacy priority for COSBOA for many years, dating back to before the creation of the role of the Australian Small Business and Family Enterprise Ombudsman. COSBOA has raised this issue with every government in the last decade.
Mr Strong said “The role of Kate Carnell’s office in getting this issue before Parliament cannot be understated. If COSBOA has been a little bit quieter on this topic in recent times, it’s because we know we have a fierce advocate in Kate Carnell.”
COSBOA’s approach to late payment times is not to villainise big businesses but rather to inform, discuss and collaborate with them to find solutions. In 2017 COSBOA worked with the Business Council of Australia (BCA) to create a voluntary Australian supplier payment code whose signatories commit to paying suppliers within 30 days of receiving an invoice.
Mr Strong further added “I’ve had conversations with the CEOs of large companies who were embarrassed to realise the impact late payments have on small businesses. It hadn’t occurred to them that paying a small business was more like paying an individual than paying a big company, and that these individuals were getting distressed because they couldn’t afford to wait.”
The problem of dodgy supply chain financing does however still need to be effectively dealt with.
Mr Strong said “we still have big companies who say ‘we’ll pay you on time if you give us a discount’ and that’s just wrong. It’s bullying, it’s extortion, and you’d have to be incredibly ignorant not to realise it’s the wrong thing to do.”
COSBOA also knows that the Federal Government is endeavouring to lead by example and has committed to paying suppliers within 20 days for contracts up to a value of $1 million and within 5 days where both entities have e-invoicing capability.
Mr Strong concluded “paying small businesses on time helps them maintain and create jobs, which is especially important in this period of high unemployment. Well done to the Government for making big businesses more accountable.”