Australia’s Small Business Ombudsman has voiced concerns over a report rail services firm UGL plans to extend payment times to 65 days after the month in which invoices are issued.
A Financial Review report last week said UGL had written to its suppliers and sub-contractors to tell them from October 15, invoices would be paid 65 days after the end of the month in which they were issued – more than twice the standard 30-day period.
Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, says the report is concerning.
“UGL has been awarded more than 20 Commonwealth government contracts in 2019, alone,” Carnell said on September 20.
“Prime Minister Scott Morrison has delivered on his promise ensuring government pays SMEs within 20 days and sent the message loud and clear to big business that anyone who wants to work with the Commonwealth government needs to agree to the same terms.”
Carnell said the Commonwealth should stop doing business with any company that fails to pay suppliers and sub-contractors within 20 days.
She also noted data recently released by Xero indicating about half of all invoices issued by small business to big business are being paid late, totalling $115 billion a year.
A 2017 inquiry by the Ombudsman found some small business have up to 20 companies on the books extending their payment times or just paying late.
“We know that just one late payment makes a difference to small business’ bottom line,” Carnell continued. “In fact, late and extended payments have been identified as one of the most significant handbrakes on small business productivity and a burden on the economy.”