The NSW Government has announced this week that all payments to small businesses are to be fast-tracked by the end of 2019.
The landmark decision sees the waiting time for small business payments reduced from 30 days down to just five.
The move has been heralded by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell who has been a strong advocate for increase rights in the sector.
“If the NSW Government can fast track their payment policy, first to 20 days by the end of this year and then to five days, every level of government can and should do the same,” Carnell said.
“Last year ASBFEO, in partnership with the Small Business Commissioners in New South Wales, Victoria, South Australia and Western Australia, and the Council of Small Business Australia, conducted an inquiry into payment times and practices in Australia.”
“The inquiry found late payments and extended payment terms is a big issue for small businesses, and that governments have a key role in leading by example.”
Under the current policy, the NSW Government requires government agencies to pay small businesses within 30 calendar days of receiving a correctly rendered invoice for goods or services provided.
While the policy was originally brought in to aid in correct payment, many franchise systems and small business owners have argued for faster turn-around on payments.
“Cashflow is king. A lack of cashflow is the leading cause of business insolvency and this underscores the importance of prompt payments,” Carnell said.
“Last week a Xero report showed late invoice payments were at their worst in June – this is simply not acceptable.”
“If you want the economy to grow, you’ve got to get the dollars moving, and the right way to do this is to pay small businesses quickly.”
Carnell said while the NSW Government’s commitment to faster payments demonstrates a clear dedication to improving the welfare of small business owners and franchisees, more work is needed to address the issue nationwide.
“We will continue to apply pressure to ensure small businesses get a fair go from all levels of government and big business.”