It’s no secret that inadequate cash flow is one of the main reasons why businesses fail in Australia. Dynamic Business only recently talked about this issue last week, with new research commissioned by H&R Block found that the biggest struggles for small businesses across Australia are: ‘cashflow’ (35%) ‘marketing effectiveness’ (30%) ‘lack of support’ (19%) Read More…
Small business ombudsman Kate Carnell calls for prompt payment of government subbies
Mon 16 October 2017 - 4:03 pmCashflow | News | Small Business
Stating that small business subcontractors are vulnerable to delayed payments, the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has announced she is examining payment terms and conditions for “subbies” working on government projects.
“Most government departments pay their invoices within 30 days, but when a prime contractor is appointed to manage a project there are regularly delayed payments further down the chain,” she said.
“Government agencies and prime contractors should ensure that payment terms and conditions throughout the supply chain are no worse than those in the head contract. It’s not good enough to leave responsibility with a head contractor and overlook small businesses who do much of the work.”
Carnell reiterated that cashflow is vital to small business success
“Cashflow is king,” she said. “A lack of cashflow is the leading cause of business insolvency and this underscores the importance of prompt payments.”
Carnell said she has written to seven government departments seeking information about their procurement and payment policies. It follows her inquiry into payment times, which recommended the government pay invoices within 15 days.
The inquiry recommended the Australian Government:
- require its head contractors to adopt the payment times and practices of the procurement policy through the supply chain;
- extend its payment policies to all agencies and entities;
- publish its payment times and policies, and for all its agencies and entities, with performance against best practice benchmarks;
- procure from businesses which have supply-chain payment times and practices equal to or better than its practices.
The inquiry also recommended that all levels of government adopt the same prompt-payment policies.
Related: Let’s Talk… Late Payments and Small businesses being used as ‘cheap form of finance’ by larger ones: late payment inquiry.
- July 2 2019 60% of small businesses shut down within first 3 years: H&R Block has ‘Grants for Growth’ to stop it
- June 7 2019 A sale is only a sale once payment is made
- June 6 2019 How SMEs can avoid common financial pitfalls by managing cash flow
- May 28 2019 Small business owners prioritise climate change, energy costs and tax cuts