The federal government has announced that it will implement 15-business-day payment terms for small business providers in response to a Payment Times and Practices Inquiry.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) released a report in April which noted that “late repayments have been a perennial problem in Australia”.
“This is a game changer for small businesses and family enterprises that provide goods and services to the government,” Ms Carnell said.
“Cash flow is king for small business and this will make a huge difference.
“It will save money on interest payments, boost confidence and free up capital for reinvestment.”
The Payment Times and Practices Inquiry found that Australia was lagging behind its international counterparts.
The report cited a European Union study which estimated that each day of reduction in late payment times saved European businesses roughly 158 million euros in financing costs.
The report also referred to a US study which revealed that faster payments to businesses saved 75,000 jobs and added $6 billion in wage growth.
The Ombudsman hopes that state governments will follow suit and introduce similar changes.
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