The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says fresh data reveals small and medium sized businesses are waiting far too long to get paid.
A survey of 1200 SME owners across the nation, conducted by East and Partners on behalf of Scottish Pacific, has found SMEs are waiting an average of 56 days to be paid.
“The smaller the business, the harder they are hit by late payment times,” Ms Carnell says.
“While businesses with $10 to $20 million revenue wait an average of 40 days to get paid, smaller businesses with $1 to $10 million revenue are waiting an average of 66 days.
“The research shows that at any given time, SMEs have a third of their revenue tied up in outstanding invoices. That’s money they could be spending on growing their business.
“The bottom line is that all businesses should be paid within 30 days.
“Over the past few weeks we have seen both Telstra and Rio move to 20-day payment terms for their small business suppliers and there is no reason why other big businesses can’t do the same.
“Our Supply Chain Financing Review has revealed the voluntary Supplier Payment Code is just not working.
“Formal recommendations will be made in the final report to be handed down in the coming weeks.
“In the meantime, the federal government is consulting on its draft Payment Times Reporting Framework legislation that will require big businesses to be more transparent about their payment times.
“Businesses and interested parties have been given the opportunity to provide their feedback on this proposed reform which is designed to drive cultural change in business payment performance in Australia.”