plan for quicker small business payments

Plan for quicker small business payments

Australia Business

Australia’s biggest companies will soon be forced to publish details of how quickly they are paying small businesses what they owe them.

The step is part of a federal government plan to help small businesses get paid faster, Prime Minister Scott Morrison has revealed at a business event in Sydney.

The strategy comes as too many small businesses still face long payment times, Mr Morrison said.

“Cash flow is crucial to the health of any business, but especially small business,” he said in a statement on Wednesday.

“We are taking action to ensure small business is not being used as a bank.”

Under the plan, the commonwealth will be required from mid-2019 to pay invoices of less than $1 million within 20 days, instead of 30 days.

The federal government is also committing to ensuring 35 per cent of its contracts go to small businesses, rather than its current 10 per cent.

The coalition will also help develop an annual reporting framework, which would require big companies with turnovers of more than $100 million to disclose how they go about paying small businesses.

More than 3000 of Australia’s largest businesses would be covered by the framework, including foreign companies and government agencies.

The government would also change its procurement policies so big businesses seeking government contracts would need to match its 20-day payment time frame.

The commitment comes after the NSW government announced earlier this year it would pay small business contractors within 20 days by the end of 2018.

Mr Morrison said all states should follow its lead and that he’s added the issue to the agenda for a meeting with state and territory leaders in Adelaide on December 12.

“All levels of government should set the standard and there should be no excuses for not paying small businesses on time,” he said.