Trade between small, medium and large businesses is valued around $500 billion per year, so the whole country benefits when we work together more productively.

We know paying business suppliers promptly and on time is critical to supporting healthy cash flows and working capital, and ultimately supports a business’s viability and ability to expand.

Although average payment times have fallen across the economy, many small businesses still report that they are facing unsatisfactory delays in payment of up to 120 days or more.

The code addresses this concern by requiring signatories to pay small business suppliers within 30 days of a receipt of a correct invoice, along with a number of other complementary commitments.

Signatories are obliged to publish the policies and practices they have in place to meet their commitments. Organisations that sign up to the code are also recognised on the Australian supplier payment code website.

Visit the website if you would like to check if a customer has signed up to the code.

The Business Council is encouraging the federal government and all state and territory governments to promote the code across Australia, including requiring their own agencies to sign up to the code.

The Business Council worked with the Victorian Government during the development of the code to adopt a single, voluntary and national approach. We look forward to continuing to work with all of Australia’s governments to improve payment practices across the economy into the future.

Signatories to the code are, first and foremost, committing to pay small business suppliers within 30 days of receipt of a correct invoice or receipt of a correct product from the supplier (whichever is the later). Payment terms such as ‘30 days from the end of the month of receipt of invoice’ or ‘payment within a 45 day period’ are not consistent with this commitment.

The code allows payment time flexibility for ‘mutually agreed terms’ and ‘standard industry practice’.

The application of the exemption for ‘mutually agreed terms’ should be consistent with the recommendation on page 14 of the Australian Small Business and Family Enterprise Ombudsman’s 2017 report on payment times and practices (i.e. “longer terms could be agreed providing not grossly unfair to one party”).

The code is designed to allow signatories to choose from one of three commonly used definitions:

  • a company with turnover below $10 million, or
  • a company with fewer than 20 employees, or
  • companies that supply up to a maximum amount of goods and services each year.

The definition/s of a small business adopted by the signatory company must be consistently applied to all small business suppliers.

The Business Council supports the establishment of a small business register, as recommended by the Australian Small Business and Family Enterprise Ombudsman. A register will make it easier for signatories to verify the small business status of suppliers, for example, by reference to their ABN.

Signatories must publish, in plain English, the policies and practices they have in place to meet their commitments.

This added transparency ensures small businesses and other stakeholders can easily find information about how companies will meet their commitments and what policies and practices are in place to benefit them. It helps to make signatories publicly accountable for meeting their commitments under the code.

The publication of policies and practices should be in an easily accessible location, usually on the signatory’s website.

Small business suppliers need to engage directly with code signatories to access the payment terms on offer under the code. All code signatories are listed on this website.

Each signatory has 18 months from the date that they signed up to the code to publish their supplier payment policy and for their payment practices to be compliant with the code.

The first independent review of the code has commenced. The review will assess the code’s take-up and implementation by industry and its impacts on payment times for small businesses.

We currently have the first independent review of the code underway.

Click here to find out more

Each signatory is required to put in place clear, fair and efficient processes for dealing with complaints and disputes about payment times and practices. These processes should be used to resolve complaints and disputes in the first instance.

There is more information about dispute resolution in the guidance note, avaliable here.

We encourage you to contact the Business Council directly to discuss the code and what it means for your business.

You can also find more technical guidance in the note avaliable here.