If you thought the wait for your pay cheque was bad, spare a thought for Australian small business owners who were found to have to wait an average 25 days past the due date to receive payments for services according to data from a recent Inquiry into Payment Times and Practices.
Thankfully the tide may be turning to give small businesses greater access to cash, with Prime Minister Malcolm Turnbull announcing on Wednesday that the federal government will be required to pay invoices up to $1 million within 20 calendar days - down from the government's current 30 day policy.
With over 6,500 small businesses currently working with the federal government, Mr Turnbull said the change would help put more money back in pockets.
"It demonstrates the government's continued commitment to small business, the engine room of employment in Australia,” he said.
"The government is already a proud leader in terms of payment times and practices, with the latest pay on-time survey showing Commonwealth agencies paid 97 per cent of their invoices within 30 days."
While the move will only apply to contractors with the federal government for now, Mr Turnbull also hoped big businesses would be encouraged to follow suit.
RELATED: Delays in financing is stunting growth for Aussie small businesses, GetCapital research finds
The government's shift in policy comes in response to calls for change from the Australian Small Business and Family Enterprise Ombudsman following its Inquiry into Payment Times and Practices released in April.
The Inquiry reported that Australia’s payment practices were falling well behind other nations, and that action needed to be taken in order to curtail the growing trend of late payments, which it found were limiting growth and raising costs for businesses.
Small Business and Family Enterprise Ombudsman Kate Carnell welcomed the announcement from the federal government, describing it as a ‘game changer’ for small business.
“Cash flow is king for small business and this will make a huge difference,” she said. “It will save money on interest payments, boost confidence and free up capital for reinvestment.”
Looking for a financing solution for your own small business? Check out Mozo’s business banking hub to compare a range of business credit card options, or check out some top business loans below: