The lobby group representing Australia’s big businesses has called on the sector to sign up to its new voluntary payment term code in a bid to stave off regulatory changes.
The lobby group representing Australia’s big businesses has called on the sector to sign up to its new voluntary payment term code in a bid to stave off regulatory changes.
The Business Council of Australia launched its Australian Supplier Payment Code today, which provides that big businesses will pay their small business suppliers within 30 days of receiving an invoice.
A number of large corporations have signed the code so far, including BHP Billiton, South32, Rio Tinto, Telstra, Lendlease, education provider Navitas, Programmed Maintenance Services and the big four banks.
In a statement, the Business Council said the voluntary effort to drive change in payments culture and practices should be given time to work before legislation was considered.
"We need a culture of cooperation, not compliance," it said.
Business Council chief executive Jennifer Westacott said the voluntary approach would be far more effective than a top-down regulatory approach as it would encourage a mutual understanding and cooperation between big and small business, as opposed to a culture of compliance.
“The launch of the Australian Supplier Payment Code begins a new age of cooperation and mutual respect between businesses big and small,” she said.
“We know paying business suppliers promptly and on time is critical to supporting healthy cash flows and working capital, and ultimately supports a business’s viability and ability to expand.
“Although average payment times have fallen across the economy, many small businesses still report that they are facing unsatisfactory delays in payment of up to 120 days.
“The Business Council decided to lead this initiative because we know businesses of all sizes are deeply connected and depend on each other to thrive.
“I encourage all large employers to sign up to the Australian Supplier Payment Code, whether they are Business Council members or not.”
Council of Small Business Australia chief executive Peter Strong welcomed the initiative.
“The commitment to prompt payment is obvious and we have already seen key members of their council embrace improved payment processes,” he said.
“We know many more big businesses will sign up and this will provide better business conditions in the economy and a healthier small business community.”
The code launch follows the release of a Bankwest Curtin Economics Centre report on Friday, which found more than half of small businesses in Western Australia were not being paid on time by larger enterprises.
The payment delays from big businesses adversely affected the vitality and growth prospects of WA's small business community, which accounted for 41 per cent of employment, the report found.
