This was published 5 years ago
Forget taxes and energy, the key election issue for small business is payment times
By Cara Waters
Politicians courting the vote of the nation's small businesses should look no further than the lifeblood issue of getting paid on time.
That is the clear message from a survey of 1000 businesses by accounting platform MYOB which saw 69 per cent of respondents saying they would vote for policies committing government and big business to pay small businesses within 30 days.
Shiftiez founder John Webster had one business fail due to slow payment times. Credit: Joe Armao
Payment times was the biggest concern for small business ahead of other issues both parties have campaigned heavily on such as company tax cuts and energy policies.
The survey of more than 1000 small businesses found 53 per cent want tax cuts with one in three already seeing a reduction in the tax they pay. Three in four of those surveyed expect a change of government in the coming election.
Small business owner John Webster said slow payment times sunk his first business.
"It took too long to get payment through, some significant payments took months," he said. "You have nowhere to go, you are beholden to them. If there was legislation to mandate to pay businesses in 30 days that would be fair for everyone."
You have nowhere to go, you are beholden to them.
John Webster
Webster is the founder of Shiftiez a platform that simplifies rostering for businesses to improve culture and save money which he started three years ago following the failure of his first business.
Turnover is under $50,000 and Webster says he has been careful to ensure he does not get caught out by late payments again.
"We changed our model to try and deal with it," he said.
MYOB chief executive Tim Reed said it did not surprise him that payment times are a significant issue for small businesses.
MYOB CEO Tim Reed said payment time continues to be an issue for small business. Credit: Jessica Hromas
"For those small businesses that find they have clients that systematically pay them late it puts a large amount of pressure on their cash flow,' he said. "The government has done a lot but there is a lot more that they could do."
Mr Reed said einvoicing was one way of enabling faster payment and should be backed by both parties while government should also comply with mandatory payment times.
"The government needs to act the way it wants to see others act,' he said.
Small business minister Michaelia Cash said payment practices were an issue consistently raised by small businesses.
Small Business Minister Michaelia Cash.Credit: Alex Ellinghausen
"Cash flow is crucial to the health of any business, but especially small business," she says. "Reports that some large businesses push out payment terms to 60 or even 120 days, or demand discounts just for paying on time, place huge financial and mental stress on business owners."
Ms Cash said although there have been improvements small businesses are still too often being shouldered with the burden of long payment times.
"We have listened and we are taking action to ensure small business is not being used as a bank by requiring large businesses with a turnover of over $100 million and government agencies to publish their payment information," she said.
Ms Cash said the government was leading by example by ensuring it pay invoices for Commonwealth government contracts under $1 million within 20 days from 1 July 2019 and will require large businesses tendering for government contracts to match the government’s 20 day payment terms.
Madeleine King, shadow minister assisting for small business, said Labor has been consulting with small businesses around the country and is aware of the immense stress late payments have on their businesses.
“Labor will continue to audit government departments payment times - which have decreased – as well as Australia’s top 3000 companies, which will only be able to tender for government contracts if they commit to paying SMEs within 20 days,” she said.