Thousands of Australian small businesses will see the benefits of faster payment times, after Telstra announced it will move to 20-day payment terms for SMEs.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell says it’s a fantastic result for the small business community.
“Telstra is leading by example with its commitment to faster payment times and there’s no reason why other big businesses shouldn’t adopt the same practices,” Ms Carnell says.
“By changing its payment terms to within 20 days of the receipt of invoice for any business that supplies up to $2 million worth of goods or services, Telstra is recognising the needs of this important sector.
“Cash flow is always king for small businesses and never more so than now, particularly for small businesses in bushfire affected communities.
“Telstra’s efforts will make a considerable difference to 85% of its suppliers. These are mostly small businesses that no longer need to accept a supply chain finance option to be paid as they should be.
“We know that by paying small businesses on time, the whole economy benefits.
“Both our Payment Times Inquiry and our Insolvency Practices Inquiry show that cash flow is the leading cause of insolvency.
“Telstra CEO Andy Penn has also indicated a need for a standard, consistent definition for Australian small businesses and I couldn’t agree with him more.
“Our Supply Chain Financing Review is showing the definition of a small business continues to be a major point of confusion and a unified approach would benefit Australian small businesses greatly.
“My office is committed to continuing to work with the business community to agree on a standardised definition.
“Overall, Telstra is showing real corporate leadership and other businesses are encouraged to follow its lead.”
