Big business put on notice about paying back their suppliers
BIG businesses are being put on notice by the Federal Government about time taken to pay back small and family business suppliers.
Legislation establishing the Payment Times Reporting Scheme was passed by the Senate this week, supporting millions of small businesses to get paid on time.
Under the scheme, which will begin on January 1, 2021, large businesses and applicable government enterprises with a total annual income of over $100 million would have to report publicly on how and when they pay their small business suppliers.
The change would provide unprecedented transparency to help small businesses make informed decisions about with whom they do business.
This would also better inform the general public about their large business purchasing decisions.
The Government developed the legislation following extensive consultations with industry associations and representatives of small and large business since early 2019.
Their feedback has directly informed the design and operation of the scheme.
Capricornia MP Michelle Landry said shining a light on large business payment performance would lead to fairer and faster payments for Australia's 3.5 million small and family businesses.
"The LNP Government is committed to striking the right balance to ensure faster and fairer payment terms to local small and family businesses in Central and North Queensland," Ms Landry said.
By being forced to report publicly, large companies not doing the right thing were leaving themselves open to adverse media coverage which could in turn damage their brand and standing in the community.
This was evidenced recently when businesses Rio Tinto and Telstra rapidly abandoned payment practices that negatively impacted on small businesses, once exposed publicly.
As a result, their payment policy time frames were shortened to ensure suppliers were paid within 20 days.
Employment, Skills, Small and Family Business Minister Michaelia Cash, said the measure would support small businesses, especially through COVID-19 challenges.
"Late payments have a significant impact on small business cash flow and inhibit the ability of a firm to invest, grow and employ," Senator Cash said.
The Coalition wanted large companies to emulate the government's record when it came to ensuring small and family businesses were paid on time.
Since July 2019, Commonwealth agencies have paid invoices for contracts up to $1 million within 20 calendar days, or paid interest on any late payments.
This captures about 95 per cent of procurement contracts entered into by the Commonwealth.