The Andrews Labor Government will introduce an Australian-first voluntary Fair Payment Code of Practice to help crack down on late payments and encourage all businesses to pay their small business suppliers on time.
Victoria is taking the lead on this important national issue, which has a serious impact on the resources of small businesses who often need cash flow to continue to be viable and take on new jobs.
Based on a similar initiative in the UK, the Fair Payment Code of Practice will require businesses to voluntarily pledge to pay suppliers on time, communicate clearly with suppliers, resolve disputes quickly and adopt fair payment practices throughout their businesses.
Under the Code, businesses will be required to pay small and medium sized business suppliers within 30 days of receiving a tax invoice and to not change the settlement period without a valid reason.
The Code will come into effect on 1 July 2017 and will be administered by Victorian Small Business Commissioner (VSBC), who will manage a new website where businesses can sign up and resolve any complaints that are raised.
Evidence in Australia and overseas has shown that some larger businesses are implementing increasingly longer payment times, with 60 to 90 day terms becoming common practice and payment lags as long as 120 days being reported in some instances.
Managing cash flow is consistently reported as the most important issue facing small businesses, with late payment of invoices negatively impacting small businesses trying to creating new jobs and expand.
Late payment times cause a ripple effect throughout the economy, as they are transmitted throughout the supply chain, successively reducing cash flow for all businesses along the way.
The new Code will be open for public consultation to give businesses the opportunity to have their say on the issue before 1 July 2017. For more information visit www.vsbc.vic.gov.au.
Quotes attributable to the Minister for Small Business, Innovation and Trade Philip Dalidakis
“Victoria’s new voluntary Code will give big businesses the chance to help our economy and take a stand on this important issue which negatively impacts so many small businesses across our state and nationally.”
“Victoria has always led the country in small business policies and initiatives – from establishing the first small business commission, to running Australia’s largest small business festival – and we need will continue to do everything we can to make sure our small businesses get the support they need to grow and create more jobs.”
Quotes attributable to the Victorian Small Business Commissioner Judy O’Connell
“Managing cash flow is critical for the success of small businesses and late payments can cause major headaches, so this new code will play an important role in strengthening this crucial sector which makes such an important contribution to our economy.”