Australia’s leading large businesses have joined forces to help solve one of the greatest problems facing small business owners and operators.

The Australian Supplier Payment Code, unveiled today by the Business Council of Australia, is an industry-led initiative that will ensure small business suppliers are paid within 30 days of issuing a correct invoice.

“The launch of the Australian Supplier Payment Code begins a new age of cooperation and mutual respect between businesses big and small,” Business Council chief executive Jennifer Westacott said.

“We know paying business suppliers promptly and on time is critical to supporting healthy cash flows and working capital, and ultimately supports a business’s viability and ability to expand.

“Although average payment times have fallen across the economy, many small businesses still report that they are facing unsatisfactory delays in payment of up to 120 days.†

“The Business Council decided to lead this initiative because we know businesses of all sizes are deeply connected and depend on each other to thrive. Trade between small, medium and large businesses is valued around $520 billion per year, so the whole country benefits when we work together more productively.”

Many of Australia’s largest and best known companies have already signed the Code, which has also been welcomed by representatives of Australian small business. Founding signatories are listed below.

“I encourage all large employers to sign up to the Australian Supplier Payment Code, whether they are Business Council members or not,” Ms Westacott said.

“This voluntary approach will be far more effective than a top-down regulatory approach as it encourages mutual understanding and cooperation between small and large business – not a culture of compliance.

“Evidence from within Australia and overseas shows that voluntary, industry-led codes have greater ‘buy in’ from businesses, ultimately benefiting everyone concerned and avoiding cost to taxpayers.

“This code also obliges large companies to help small business suppliers implement new technologies and practices that will assist them with faster, more efficient invoicing and payment.”

Peter Strong, chief executive of the Council of Small Business Australia, which represents more than 350,000 small businesses, said: “We congratulate the Business Council on this initiative. The commitment to prompt payment is obvious and we have already seen key members of their council embrace improved payment processes.  

“This includes Coles, Rio Tinto, Telstra and Woolworths – crucial players in the Australian business community. We know many more big businesses will sign up and this will provide better business conditions in the economy and a healthier small business community.”

Ms Westacott also acknowledged the Victorian Government’s input in designing an effective code.

“We welcome the support of the Victorian Government, and particularly the Minister for Small Business, Innovation and Trade, Philip Dalidakis, who has led considerable efforts to deliver fairer payment terms for Victorian businesses,” Ms Westacott said.

“We will continue to roll out the Code in collaboration with them.

“The Business Council will now work with the Australian Small Business and Family Enterprise Ombudsman and State-based Commissioners to regularly review the progress of the Code. We will also work with the Ombudsman to develop a small business register to make it easier to identify suppliers eligible for 30 day payment, and assist with collecting information for the Ombudsman’s forthcoming National Payment Transparency Register."

† Dun & Bradstreet reported that average time taken to settle invoices in Q3 2016 was 44.8 days, down from 54.8 days in 2013. PwC data showed Days Payable Outstanding falling from 61 days in 2011 to 49 days in 2016.