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A recent survey has revealed a large majority of small business owners are in favour of the government implementing a voluntary code for encouraging businesses to pay more promptly.
The latest MYOB snapshot indicated that 72 per cent of small business owners supported the introduction of a voluntary payment code which would help reduce late customer payments.
MYOB chief executive Tim Reed said it was unfair many small business owners are being subjected to late payments on top of the day to day challenges of running their own business.
The survey revealed that 77 per cent of businesses had felt some sort of business impact due to a customer not paying their bills on time, while only 23 per cent saw no impact at all.
The effects of late payment include impacting business owners’ personal finances at 35 per cent, and the ability to cover expenses such as rent and power, at 32 per cent, according to the results.
The survey also indicated that late payment also takes an emotional toll on SMEs with 52 per cent confirming it impacts their stress and anxiety levels.
Mr Reed said given the support for a voluntary payment code, it would be a positive move to see the government and big businesses to “put forward an initiative to implement a national prompt payment protocol to ensure small businesses are not being delayed payments by other businesses”.
“Improving this situation to ensure all businesses are being paid on time should be a shared responsibility across Federal Government and businesses of all sizes,” said Mr Reed.
The Council of Small Business Australia (COSBOA) recently called for the development and implementation of a national prompt payment protocol where signatories voluntarily agree to abide by the rules of the protocol and are publicly recognized for doing so.
“Some big businesses are taking more than 90 days to pay an SME despite agreed payment terms being 30 days – and this can be the difference between insolvency and a healthy business continuing to operate,” said the chief executive of COSBOA.
When asked what they thought the main reason for late or slow payments were, 52 per cent of survey respondents indicated a lack of regard for invoicing terms and payment processes.
This was followed by almost half or 46 per cent of respondents nominating cash-flow issues among customers.