Posts Tagged ‘late payment’

  • Government protects small print players with late payment review

    The Federal Government is working help protect small to medium industry players by tackling Australia’s ‘late payment culture’, calling for public feedback on its proposed Prompt Payment Protocol. 

    The federal government’s department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education released the Australian Prompt Payment Protocol Discussion Paper this month, and is now calling for industry feedback and comments on the proposed introduction of a Prompt Payment Protocol in Australia to help determine the development and implementation of the scheme.

    The move could see small to medium sized printers all over the country, as well as some larger players, protected against the cashflow problems that can arise from late payment of debts – a trend that has seen its fair share of casualties in the local printing industry.

    According to credit reporting firm, Dun & Bradstreet, 90 per cent of small business failures are caused by poor cash flow. Small businesses represent almost 96 per cent of all businesses in Australia, and many face an inherent imbalance of bargaining power when dealing with large companies.

    “Late payments between businesses have a negative impact on competitiveness,” – Gary Gray, Minister for Small Business.

    In a joint statement, Gary Gray (pictured), Minister for Small Business, and Bernie Ripoll, Parliamentary Secretary for Small Business, said: “We are pleased to release for comment this discussion paper seeking stakeholder views on an Australian Prompt Payment Protocol to help strengthen small business payment terms, cash flow and business-to-business relationships.

    “In the current economic climate, small businesses are facing the challenges of global economic uncertainty, the high Australian dollar and tight cashflow. Cashflow in particular is essential to the prosperity and health of small businesses. Late payments between businesses have a negative impact on competitiveness and increase the costs of doing business. Conversely, on time payments help businesses to unlock greater opportunities for investment to grow their business and to pursue their entrepreneurial aspirations.”

    According to the paper, a staggering $19 billion annually is locked away from businesses beyond the widely accepted 30-day payment term. The paper also says that late payment adds financial and administrative costs, reduces the potential for investment opportunities, damages business relationships and fuels business uncertainty. This weakening effect on businesses, particularly small businesses, compromises their competitiveness and survival.

    It is no secret that the culture of late payment has been endemic in the local printing industry for years, with some prominent companies going so far as to publicly include lengthy payment into its trading terms.

    In early July, Colorpak told suppliers it was instigating new payment terms that will see suppliers’ invoices from the beginning of August onwards paid 60 days from the end of month of the their lodgement – effectively up to 90 days from invoice lodgement, and well in excess of the widely accepted 30-day payment term as stated by the Government.

    To help combat the knock-on damage that can be caused by exposure to lengthy payment periods, the Protocol aims to foster a broad change in Australia’s late payment culture by establishing core principles that set the benchmark for good payment practices.

    It is targeting business-to-business late payments without introducing extra regulation. The Protocol will not only encourage companies to publicly commit to paying on time, but also enable small businesses to leverage better contracting behaviours and strengthen overall business relationships.

    The paper outlines the key design features of the Protocol that will help encourage a necessary shift in Australia’s late payment culture. It canvasses a range of implementation options to ensure the Protocol is capable of delivering real benefits to business.

    The government says it has already undertaken initial consultation with a range of key stakeholders, including peak bodies and small business groups, and hopes the paper will help generate feedback on the key design and implementation issues of the Protocol.

    To find out more about the Prompt Payment Protocol or provide feedback for the Australian Prompt Payment Protocol Discussion Paper, click here. The closing date for written submissions on the Protocol closes on 23 August 2013.