Nov 27, 2017
I’m referring to the Prime Minister’s announcement that he has instructed Australian government departments to ensure that invoices, submitted by small/medium enterprises to a government department, are paid within 20 calendar days.
That’s great news and I’m sure many small/medium enterprises will be monitoring their payment records to ensure that the government departments are paying them within the time stipulated by the Prime Minister.
The Prime Minister’s comment that small business should “not be used as a bank” is welcome news for SMEs.
It is an acknowledgement that the Australian government takes too long, or has not always paid its bills on time, which has hurt small businesses.
The government’s reaction is in response to the Australian government’s Small Business and Family Enterprise Ombudsman – Kate Carnell’s criticism about late payment by federal government departments contributed to Australia having been awarded a very dubious title of having the “longest debtors’ days outstanding in the world”.
Whilst the Prime Minister’s announcement is welcome, big business has a significant role to play in paying invoices on time as well. It would be great if Kate Carnell could influence big business to pay their invoices to SMEs within 20 days as well!
Small/medium enterprises’ managements also have a significant role to play in reducing their debtors’ ledgers.
Many larger businesses complain that small/medium enterprises do not help themselves in that they lodge tax invoices without all of the required documentation and this delays the payment process. Another complaint is that the tax invoices are not submitted within the lodgement timelines that the customer has established that, if abided by, would ensure payment was made within the stipulated time.
This opens up a tremendous opportunity for accountants and business advisors if you are committed to undertaking business advisory services on behalf of your clients.
One of the services that I believe you should be offering to all of your business clients is a regular debtors’ system review (at least annually). This would involve undertaking a review of the systems that your clients are using in all aspects of the control of debtors, including the regular calculation of the debtors’ days’ outstanding figure that applies to the client’s business.
The review would include checks to ensure that all invoices are being sent promptly to their customers and that every month the calculation is made as to what the debtors’ days outstanding figure is and that management is aware of that calculation and takes prompt action to review what is happening if the figure has blown out.
These small/medium enterprises will really benefit from their accountants/business advisors undertaking a due diligence review on their debtors’ processes and formulating an appropriate debtors’ management system for their businesses.
The SME Debtors’ Systems Manual, supplied by ESS BIZTOOLS, is a template that an accountant can edit to create a “personalised debtors’ system” for an individual client. This manual will greatly assist the person who is responsible for the administration of debtors within the client’s business.
This is proactive business advisory services work for accountants which will contribute to an improvement in small/medium enterprise businesses’ cashflows.
This involvement by you will also contribute to the creation of a “new income stream” within your accountancy business.
ESS BIZTOOLS has two product packages available to assist accountants in this process:
Debtors’ Management Product Package (Click here) for additional information.
SME Debtors’ Systems Manual (Click here) for additional information.
We have a free article available for you “Debtors’ Days Outstanding Silent Killer of Modern Business”.
If you require any additional information on the Debtors’ Management Product Packages available to assist accountants/business advisors to supply value adding services to small/medium enterprises to assist in the reduction of debtors’ days outstanding, please do not hesitate to contact us.