Australia’s Late SMB Payments Fight Starts Within Government Walls

As Australian policymakers explore how to combat late B2B invoice payments to small- and medium-sized businesses (SMBs), the government is beginning to tackle the issue within its own walls.

Reports in the Brisbane Times on Tuesday (Nov. 21) said new rules come into effect this week that will see government workers required to pay invoices for contracts within 20 days, following recommendations from the Australian Small Business and Family Enterprise Ombudsman.

The new invoice payment term rules apply to contracts worth up to $1 million and will reportedly affect more than 6,800 businesses that work with government buyers. Reports said the government’s decision to follow the Ombudsman’s recommendations are also part of a broader initiative to boost investment in public infrastructure and in competitiveness between Australian businesses.

Small public contractors routinely wait a month to receive payment, reports said. Late payments are a problem across both the private and public sector, however. In fact, reports citing research from Dun & Bradstreet found in 2016 that “late payment times remain unacceptably high.”

Large corporates were found to be the worst offenders of late invoice payments.

Ombudsman Kate Carnell has been a vocal opponent of late payments, warning that as much as half of the nation’s SMBs have more than $20,000 owed to them by larger corporates using these businesses as “cheap finance.”

The government’s new rules follow the Business Council of Australia’s initiative last March to deploy a voluntary code of supplier payment ethics. Businesses that sign the agreement say they will pay their suppliers within 30 days of receiving an invoice though, like other similar payment codes around the world, there is no way to enforce the agreement.

Reports said the Business Council’s effort is an effort to avoid tackling late payments through legislative means.