Getting paid on time
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Late payments and their impacts
The direct effects of late payments has been an ongoing issue for Australians in small business. The Australian Small Business and Family Enterprise Ombudsman’s Payment Times Reporting Inquiry (2017) found that of the 2,783 businesses surveyed, around half had more than 40 per cent of their invoices paid late.
Currently, small business owners might find that their supplier invoices aren’t getting paid, that payment is delayed or that big businesses are trying to extend their payment terms.
It’s vital that small business owners are paid promptly as they work on recovering from the economic impacts of coronavirus (COVID-19). For many, getting paid on time can not only help in managing cashflow, but also alleviate the increased stress and pressure they’re under at this time.
This is why the Victorian Small Business Commission (VSBC) is urging businesses to follow the Victorian Government’s lead by making an ongoing commitment to pay small businesses within 10 business days.
Victoria’s Fair Payments Policy
The Victorian Government amended its Fair Payments Policy so that from 1 January 2021, departments and major agencies are required to pay invoices up to $3 million within 10 business days of receiving a correct invoice.
The Victorian Government is also the only state government signatory to the Australian Supplier Payment Code, which is a voluntary industry-led initiative that aims to ensure prompt and fair payment for suppliers through a set of best practice standards.
Australia’s Payment Times Reporting Scheme
Australia’s Payment Times Reporting Scheme also came into effect on 1 January 2021. It requires large businesses and large government enterprises to report twice a year on their small business payment terms and times. The aim is to:
- increase transparency when it comes to large business payment performance
- help small businesses to make informed decisions about who they do business with
- create incentives for improved payment times and practices
- help Australians to make informed decisions about which large businesses they buy from.
Tips for small business
What should I communicate to my customers to increase the chances of my invoices getting paid on time?
The ATO’s tax invoice must-haves walks through information that’s needed when invoicing sales under $1,000 to make sure your customers can determine the key details. It’s also a good move to:
- contact your customers’ accounts areas to be certain about what they need to pay invoices
- use electronic invoices to reduce errors
- review the terms of your contract closely so you’re across rights and obligations – both yours and your customers’.
How can I follow up an invoice that hasn’t been paid?
We recommend accessing Business Victoria’s step-by-step guidance, templates and scripting, including templates for sending a friendly payment reminder, sending a final notice and trying to make direct contact.
I’ve tried to chase up an invoice, following Business Victoria’s guidance, and I still haven’t been paid – what should I do?
If chasing up an unpaid invoice hasn’t been successful, you can apply for our impartial help. Our help includes free assistance early on, and if the matter can’t be sorted this way, we can progress it to low-cost mediation. At mediation, an experienced and independent professional – the mediator – will guide you and the other party in negotiations to help you resolve the dispute fairly without needing to go to court.
For more information, you can speak with a member of our team by calling 1800 878 964 or emailing us.