THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has welcomed the Federal Government’s move to pay e-invoices within five days or pay interest on late payments.
The five day e-invoicing payment policy applies to contracts valued up to $1 million, where both the lead contractor and federal government agency both use e-invoicing.
“This is a game-changer for e-invoicing small businesses that are directly engaged in a contract with a federal government agency,” Ms Carnell said.
“The next step would be to apply this to businesses right down the supply chain. Our Small Business Counts report shows that late payments continue to hamper small business viability, with half of all small businesses reporting late payments on 40% of their invoices," she said.
“This policy will improve cash flow for small businesses so they have the confidence and the capital to re-invest. We encourage small and family businesses to adopt e-invoicing and make the most of the benefits that flow from that, including reduced administration costs and fewer processing and handling errors.
“We know that around 1.2 billion invoices are exchanged in Australia every year. Research shows it costs about $30 to process a paper invoice and about $9 per e-invoice, a significant saving," Ms Carnell said.
“Around 20 percent of traditional invoices are sent to the wrong person and about 30 percent contain incorrect information – delaying payment. In fact, research shows the Australian economy would benefit to the tune of $28 billion over a decade, if all businesses switched to e-invoicing.
“This Federal Government e-invoicing payment initiative sets a benchmark for all states, teritories and big business to follow.”