Last year, the Federal Government put in place that Government is to pay all suppliers within 20 days. In addition to this, legislation (known as the Payment Times Reporting Bill 2020) was introduced to Parliament last week that requires businesses with a total annual income of more than $100 million to report on how and when they pay their small business suppliers.
This is a second important part of the process to address the problems created by late payment times. It is expected to be followed up later with a model based on the UK’s approach on Mandatory Payment terms. In the UK, the Statutory time period is set at 20 days, but it’s expected Australia will adopt a 30 day payment requirement. There is still some ambiguity as to how it will be enforced and what the penalties will be. There also needs to be clarification on when the payment clock starts, so invoices aren’t simply filed for a period before making it into the official payment process.
We’ve never understood how it could be good for any business not to pay its suppliers on time. A good business understands that you need your suppliers, and they need you – both parties need to make money and get paid. These changes should be a big wake up call to companies that don’t pay their bills on time. They might even find benefits themselves too – like an accounts department not pre-occupied on unproductive answering of creditor calls, as well as sending the message that the business is well run and stable.
As always, onwards and upwards!