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The professional body has welcomed central government agencies’ commitment to paying 95 per cent of supplier invoices within 10 working days.
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CA ANZ backs government’s mission to improve invoice payment times
09 October 2024
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CA ANZ has welcomed the commitment from central government agencies to pay supplier invoices within 10 working days.
The professional body said this is an important step towards reducing payment times for all businesses.
CA ANZ sustainability and business reform leader, Karen McWilliams FCA, said cash flow is key in this tough economic climate and it’s "no good" for businesses to have a stack of accounts receivable.
“It’s great to see government agencies walking the talk and publishing their own performance in meeting their payment time commitment,” McWilliams said.
“This transparency sends a clear signal to the market that payment times need to be timely.”
Recent data from the Ministry of Business, Innovation and Employment revealed central government agencies confirmed 95.3 per cent of invoices were paid within 10 working days during the April to June 2024 quarter.
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The data highlighted a slight uptick from the previous quarter, which was recorded at 93.6 per cent.
According to the results, 21 agencies met this requirement which is set to improve given the current momentum with key suppliers to the government becoming e-invoicing enabled.
McWilliams said improved payment times is a crucial step that has been needed for some time now.
“Chartered accountants around the country tell us that slow payments create cash flow issues, place strain on business relationships and, in some cases, lead to insolvency,” she said.
“We need a culture shift, to speed up payment times and this transparency is leading by example.”
The data showed the top achievers to be the Ministry for Women, Serious Fraud Office, Crown Law Office, and Ministry for Primary Industries (MPI).
MPI processed 7,207 invoices within the quarter in comparison to the 1,582 combined for the other three agencies at the top of the list.
CA ANZ said the coalition government repealed the previous Labor government’s Business Payment Practices Act 2023, which came into effect in July 2023.
The coalition said this was due to its focus on improving government departments’ 10-day payment targets and creating an industry-led voluntary code.
A statutory review of Australia’s mandatory scheme found that e-invoicing was poorly functioning, which has seen some improvement over the last 12 months.
However, CA ANZ said further improvement is needed and there needs to be an increase in e-invoicing adoption.
McWilliams said CA ANZ members have said most small businesses don’t have a choice to accept or reject a proposal from a large business based on payment times.
“There’s a clear power imbalance there,” McWilliams said.
“Although there is no direct connection between e-invoicing adoption and faster payment times, as this information shows, there is a correlation.”
“We encourage the government to take steps to increase e-invoicing adoption within the business community, particularly supporting small businesses, who have much to gain from faster payment times.”
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