In an article published in The Australian earlier this month, business analyst Robert Gottliebsen suggested that the best way to jumpstart the economy is to urge big companies to pay SME invoices on time.
Mr. Gottliebsen pointed out that this is the perfect strategy for the government as it won’t cost the national budget a dollar. He also reminded us that the Prime Minister himself espoused similar views just last year.
At the time, Prime Minister Scott Morrison said:
“What really makes small businesses light up, is when they get paid. When they get paid and when they get paid on time. If you don’t pay them on time, it slows the whole show down. In the economy the money has got to move. If you slow it movement down, everything slows down.”
Prime Minister’s Promises
In a speech at the 2018 Business Council Annual Dinner, the PM told Australia’s biggest companies that if they wish to work with the government, they have to pay their contractors on time with in 20 days.
In the same event, the PM announced several measures his government was planning to ensure faster payment times. This includes a “name and shame” campaign wherein companies with an annual turnover of at least $100 million will be required to publish their payment information.
“I want people to know who to do business with and people should do business with people who pay on time. They should know who they are, and they should be able to make those judgements and I’d like to see that as a positive incentive for businesses to pay more readily.”
He added that this plan will cover:
“…3,000 of the largest businesses in Australia, including foreign companies and government entities. Small business will have more transparency, allowing them to do business with better payers.”
In his article, Mr. Gottliebsen urged the Prime Minister to act on these promises now and to do so quickly before the economy experiences another downturn.
We couldn’t agree more with Mr. Gottliebsen’s suggestion. Given that late payments cost SMEs up to $7 billion a year, it’s high time the government implements more stringent measures to combat this issue. Imagine how much of a boost such an amount will provide to the economy if it weren’t tied up in outstanding invoices.
While the Prime Minister’s “name and shame” plan might seem harsh to many, there is no denying it’s potential to be an effective tool in motivating big businesses to become better payers.