Large businesses that offer 30-day payment terms to their smaller business partners rarely pay on time, a new study shows.
A report by the Australian Small Business and Family Enterprise Ombudsman released on Monday found little had changed since the 2017 survey where one in two small and medium businesses reported greater than 40 per cent of their invoices were paid late.
Of particular concern, 28 per cent of respondents reported over 60 per cent of their invoices were paid late last financial year.
Ombudsman Kate Carnell said the survey had also found some large corporations were reluctant to reveal their time-frames for payments and how often they met the target.
“Despite having small business supplier definitions, some large businesses could not identify how many of their suppliers were small businesses,” Ms Carnell said.
The Ombudsman said it showed the need for better business reporting and registration.
In November last year the federal government announced its suppliers will be paid within 20 days for contracts up to $1 million by 1 July 2019. And it will develop an annual reporting framework requiring large businesses over $100 million in turnover to publish their payment terms information.
Ms Carnell said it was an important issue as, “cashflow is king to small business”, pointing out that poor cashflow is the primary reason for insolvency in Australia.
Originally published via Inside Small Business