Payment Times

Payment Times Reform

by Angus Jones

For far too long, SMBs have grappled with the detrimental effects of late payments, which can disrupt cash flow, hinder growth, and even force some businesses to shut down. The passing of the Payment Times Reporting Amendment Bill acknowledges the significant positive impact prompt payments have on the sustainability and success of SMBs.

The reform measures aim to enforce stricter regulations and penalties for big businesses that consistently fail to meet payment deadlines. By holding companies accountable for their payment obligations, the reform will ensure that SMBs are not at a disadvantage when it comes to receiving timely payments for their products and services. Here are some of the key benefits this reform represents.

Supporting SMBs and Strengthening the Economy:

Our recent Pursuing Payments Report shed light on the gravity of the problem, revealing that nearly one in five Australian small business owners estimate losing between $6,000 and $30,000 annually due to late payments. This data underscores the urgent need to improve payment times, not only for the survival and growth of local businesses but also for the overall health of the economy. The passing of this legislation marks a significant step in the right direction, as it will allow businesses to get paid faster, resulting in improved cash flow. With better financial stability, SMBs can invest in growth, hire more employees, and contribute to economic prosperity.

Closing the Gender Gap:

It is crucial to recognise that late payments affect every business, but they disproportionately impact women, creating an uneven playing field. Our data indicates that a staggering 29% of women feel uncomfortable asking customers for payment, and this number rises to almost half (46%) when it comes to chasing late payments. In comparison, only 26% and 40% of men share these sentiments, respectively. This disparity highlights the urgent need for reform to address gender-based challenges in the payment process. 

Promoting Transparency and Informed Choices:

One of the key benefits of the payment times reform is the promotion of transparency in business practices. Recognising and highlighting businesses that prioritise prompt payments to small businesses not only instils confidence in SMBs regarding their partnerships but also allows consumers to make informed choices. When consumers are aware of which businesses treat their suppliers well, they can actively support those businesses that adhere to fair payment practices. This empowers consumers and creates a positive cycle of trust and support within the business community.

The approval of the payment times reform legislation marks a significant achievement that deserves recognition from all parties involved. Businesses need to understand that prompt payment is not just a matter of financial responsibility, but also an imperative to keeping the Australian economy in good shape.

Contributed By Luke Fossett, General Manager, GoCardless Australia and New Zealand 

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