This protocol was developed to address the issue of late trade payments, which had been a gradual increasing phenomena, that badly affects small enterprises who supply to large business customers that pay late.
Thus in 2013, the government had developed the ‘Prompt payment protocol’ based on submission from businesses of all sizes.
It addresses the delays in trade payments, specifically late payments to small businesses. It acknowledges that postponed payments are usually passed down the supply chain and small businesses are often the most vulnerable, resulting in the withholding of staff salary, payments to suppliers, financiers and even the ATO.
Steps are being outlined in the discussion paper, which underpin business-to-business accounting systems. There are a few proposed principles: i.e. to pay on time, to have clear communications, to encourage good business relationship, and to adopt a process to resolve complaints.
For now, the government has not announced its intention on implementing this new initiative across the country.