New protocol to ease cash flow woes

The Australian Government has completed its submission period with businesses of all sizes to develop new a protocol for tackling the ongoing trend of late trade payments.

The government's discussion paper, Prompt Payment Protocol was released on 24 July as part of steps to identify the best way to target business-to-business late payments.

The discussion paper draws on D&B Trade Payments Research showing that businesses take more than 50 days to pay their commercial trade bills. D&B estimates that $19 billion annually is locked away by business that don't pay accounts from other businesses within 30 days.

Minister for Small Business Gary Gray said delayed payments can create a culture of late payment which could be detrimental for small businesses suffering cash flow problems.

"Delaying payment can often have knock-on effect, because the delays are passed down the supply chain to those that can least afford them, often small businesses," he said.

"Small businesses are at the heart of our economy and good cash flow is vital to enable them to invest, compete, grow and support Australian jobs."

Bernie Ripoll, Parliamentary Secretary for Small Business, said the discussion paper is about encouraging businesses of all sizes to engage in conversation about late payments.

"The protocol will encourage good payment practices between businesses without introducing extra red tape," he said.

"Over time small businesses will have confidence in the certainty of payment when dealing with protocol signatories."
"Any business - big or small - that signs up will be able to use the goodwill from making a public commitment to promote themselves as business leader in prompt payment, building greater trust and sustainability."

The government is now seeking feedback on the paper to determine the best way to implement new protocol across the whole economy.

For more information, you can download the Prompt Payment Discussion Paper here.

If your small business is struggling from late payments and suffering cash flow problems, here are some links that could help:

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