In Australia, at any one time, there is around $26 billion in unpaid debts owed to small businesses. With cash flow being the number one cause of business insolvency in Australia, being paid on time is critical to business success.
The NSW State Government has just upped the game in paying small businesses, committing to 5-day payment terms for government-contracted SME’s for contracts up to $1 million.
The new fast track payment measures will be rolled out by the end of 2019, making the NSW Government the fastest paying in the country.
As a result of the change, contracted SME’s will have the confidence to work with government without the stress of chasing payments — minimising risk, increasing business confidence, and cultivating productivity.
While improving payment terms for SME’s is a great step forward, the Chamber is calling on the government to go further and develop a new framework to actively encourage more inclusive tendering arrangements for small business.
NSW Business Chamber’s CEO, Stephen Cartwright, says “It’s great to see the State Government lifting its game and supporting small business. People don’t go into a supermarket and pay for their groceries 120 days later, but they’ll do it with the services of SME’s — this mentality needs to stop and NSW is leading the way. I’m looking forward to seeing other governments and multinationals in Australia follow suit”.
For many Chamber members, a commitment to quick payments from the government doesn’t fix the ultimate problem of competing and winning government contracts in the first place.
Chamber member John Wakeling from Marketingheads, a specialist marketing firm that tenders for government contracts, says “While improvements to payment timeframes are great, the bigger issue for SME’s when looking to work with government are the other terms and compliance requirements in government contracts — it all becomes too hard for small businesses”.