Federal government fails to pay 55,000 businesses on time

Small business leaders have called on the government to institute a small business commissioner, after a report found 55,000 businesses did not receive payment from government departments within 30 days.

In the 2010-11 financial year, all federal government agencies paid 90% or more of their bills to small businesses on time, according to a report tabled in parliament.

Despite this, 55,000 invoices were paid more than 30 days late, with 10,900 of those more than 60 days outstanding.

Council of Small Business of Australia executive director Peter Strong says the figures strengthen the need for a small business commissioner.

Strong says many parts of the bureaucracy didn’t yet understand how much small businesses relied on dependable cash flow.

“Small businesses are people and they need the money…A small business commissioner at the federal level would support the minister and the government, and help the bureaucracy to deal with small business.”

Strong acknowledged the figure was much lower than it used to be.

“Ten years ago it was an awful problem. The government over the years have become a lot better at paying small businesses – let’s acknowledge that.”

“But if this was 55,000 workers who hadn’t been paid, action would be taken by the Fair Work Ombudsman.”

In December 2008, a late payment fee was introduced by the Department of Finance and Deregulation that saw government agencies pay a simple interest charge on late invoices worth up to $1 million for payments made after 30 days of receiving an invoice.

The past financial year saw 60 businesses awarded interest on their late payments, totalling $3863. The year before, 33 businesses received $4,821 in interest fees.

When the government began collecting figures on overdue payments to small businesses, in 2002, only 82.4% of bills were paid on time.

Since then there has been a steady improvement, with the latest result showing 97.7% of bills across all departments by value being paid on time – a 0.5% improvement on the 2009-10 result.