The Australian Government will consult businesses on a new approach to improving small business cash flow and strengthen business relationships.
It has released a discussion paper on a Prompt Payment Protocol to help gather input from business about the best way to target business-to-business late payments that cause cash flow problems.
Research conducted by Dun & Bradstreet estimates that an average of more than $19 billion annually is locked away by businesses that don't pay accounts from other businesses within 30 days. In fact, Australian businesses continue to take on average over 50 days to pay their commercial trade bills.
Minster for Small Business Gary Gray said businesses that take longer to pay their bills are contributing to a culture of late payment that has taken hold in Australia.
"Delaying payment can often have a knock-on effect, because the delays are passed down the supply chain to those that can least afford them, often small businesses," Mr Gray said.
"Small businesses are at the heart of our economy and good cash flow is vital to enable them to invest, compete, grow and support Australian jobs."
Parliamentary Secretary for Small Business Bernie Ripoll said the release of the discussion paper will encourage businesses of all sizes, in all sectors to have a conversation about late payments.
"The protocol will encourage good payment practices between businesses without introducing extra red tape," Mr Ripoll said.
"Over time small businesses will have confidence in the certainty of payment when dealing with protocol signatories.
"Any business – big or small - that signs up will be able to use the goodwill from making a public commitment to promote themselves as business leaders in prompt payment, building greater trust and sustainability."
The discussion paper is seeking feedback from both large and small businesses on the protocol and how best to implement this new initiative across the whole economy.
A copy of the Prompt Payment Discussion Paper and further information is available on the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education website. Submissions close on 23 August 2013.
24 July 2013