Government reveals progress towards paying invoices on time
Recent central Government data showing agencies are meeting their commitment to pay 95 per cent of supplier invoices within 10 working days is an important first step towards reducing payment times for all businesses, says Chartered Accountants Australia and New Zealand Sustainability & Business Reform Leader Karen McWilliams FCA.
MEDIA RELEASE (AU)
“Cashflow is key in this tough economic climate. For businesses, it’s no good having a stack of accounts receivable, when you can’t pay your rent or utility bills.
“It’s great to see Government agencies walking the talk and publishing their own performance in meeting their payment time commitment. This transparency sends a clear signal to the market that payment times need to be timely.
“Chartered accountants around the country tell us that slow payments create cash flow issues, places strain on business relationships and, in some cases, leads to insolvency. We need a culture shift, to speed up payment times, and this transparency is leading by example.”
The top achievers are the Ministry for Women, Serious Fraud Office, Crown Law Office and Ministry for Primary Industries (MPI), all paying 100 per cent of their invoices within 10 days. Impressively, MPI processed 7,207 invoices in the quarter – versus 1,582 combined for the other three agencies at the top of the list.
The latest data shows that 95.3 per cent of invoices were paid within 10 working days, up from 93.6 per cent in the previous quarter.
In March, the Coalition Government repealed the previous Labour Government’s Business Payment Practices Act 2023, which came into effect in July 2023, saying that their focus was instead on improving Government departments’ ten-day payment targets and creating an industry-led voluntary code.
“Our members tell us that most small businesses don’t have a genuine choice to accept or reject a proposal from a large business, on the basis of their payment times. There’s a clear power imbalance there. Although there is no direct connection between e-invoicing adoption and faster payment times, as this information shows, there is a correlation,” continued Ms McWilliams.
“We encourage government to continue to take steps to increase e-invoicing adoption within the business community, particularly supporting smaller businesses, who have much to gain from faster payment times.”
“A statutory review of Australia’s mandatory scheme found that it was poorly functioning, with unwieldy legislative requirements that compromised the reporting system and the regulator. A year on from that review, many of the recommendations have been implemented although we are yet to see an increase in e-invoicing adoption.”
