Another boost for stability of small businesses in Australia

Businesses with Commonwealth government contracts will have to pay their small business sub-contractors within 20 days or risk fines and penalties under new laws that started on 1 October, says the Australian Small Business and Family Enterprise Ombudsman, Bruce Billson.

“Fair payment times are incredibly important for the viability of small businesses and I welcome the beginning of this significant policy,” Billson said. 

Under the Payment Times Procurement Connected Policy introduced by the Federal Government, large businesses with Commonwealth government contracts of over $4-million are required to pay their small business sub-contractors of up to $1-million within 20 calendar days, or pay interest.

Importantly, they must also take reasonable endeavours to ensure smaller businesses throughout the supply chain of their contract are paid on time by other sub-contractors.

Lodge complaints with the Treasury

Under this policy, where disputes arise, small and family businesses will now be able to lodge a complaint through the Treasury.

“Challenging large businesses payment practices can be daunting for smaller businesses. I always encourage an initial conversation between the parties to try to resolve a dispute,” Billson said.

“But if this is difficult, my office is here to provide support and guidance to try to resolve your dispute.”

The Australian Small Business and Family Enterprise Ombudsman’s website www.asbfeo.gov.au has a more detailed fact sheet on the Payment Times Procurement Connected Policy.

Large businesses are reporting publicly

In November last year, small and family business minister, Senator Michaelia Cash, said that under the Federal Government’s Payment Times Reporting Scheme, large businesses 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 rules would require large businesses to detail their small business supply chain financing arrangements, such as reverse factoring. This would ensure small businesses were fully informed about the large businesses that use these types of arrangements.

“This will allow our small businesses to make informed decisions about who they do business with,” the Minister said at the time.

“Shining a light on large business payment performance will lead to fairer and faster payments for Australia’s 3.5 million small and family businesses,” she added.