A new campaign has been launched to encourage businesses to pay their bills on time, with particular emphasis on major companies to lead the way.
Invoice payment times in Australia have blown out well past the 30-day standard according to the participants in the joint campaign: the Council of Small Business of Australia (COSBOA), the Australian Industry Group (Ai Group) and the Australian Institute of Company Directors (AICD).
The campaign is calling on the CEOs of major companies to make a public statement that their company will commit to paying on 30-day terms by June 2018.
COSBOA CEO, Peter Strong, says the lifeblood of small business is cash flow, but late payments are now commonplace.
“It has become increasingly common for a 90-day payment frame to be included in business-to-business contracts,” notes Strong. “In some cases this has extended out as far as 120 days.”
Strong highlights the stress this can have particularly on operators such as individual contractors, who he says can face 60-day payment terms.
“Individual contractors, unlike business-to-business payments, often rely on this money to live, to pay mortgages and to put food on the table. In these instances, late payments can have a huge impact.”
The culture of late payment must change according to AICD CEO, John Brogden, as businesses of all sizes rely on consistent cash flow.
“Best practice in governance demands that businesses pay on time. Without surety of cash flow it is hard for any business to achieve strong and consistent performance,” he says.
“I believe there is a common desire to fix this problem and for all Australian businesses to pay on time, every time.”
The campaign follows the recent announcement from the Small Business and Family Enterprise Ombudsman, Kate Carnell, of an inquiry into big business payment times.
“We should all be getting behind this campaign,” adds Ai Group CEO Innes Willox. “Paying on time is the right and fair thing to do.”