Supermarket giant Coles has announced it will start paying small suppliers within a shorter time frame just weeks before an ombudsman's report into big corporations pay terms.
Instead of an average of 30 days, small suppliers will be paid within 14 days from July, Coles announced on Friday.
Coles managing director John Durkan said more than 1,000 suppliers that provide up to $1 million worth of merchandise a year to Coles will have the time they wait for payment shortened.
"We understand how important cashflow is for small suppliers and shortening payment times will help to make it easier for them to run their business," Mr Durkan said.
In coming weeks, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell will release the findings of her probe into large corporations' payment times, which she says have become worse in the past 12 months.
"The inquiry has found that payment times have become worse in the last 12 months, with large multi-national companies being the worst offenders," Ms Carnell said on Friday.
"In fact, some large companies have moved payment terms to as long as 120 days."
Ms Carnell said cashflow is important for small businesses and for a big player like Coles to take affirmative action was a significant move that will benefit hundreds of small businesses.
Woolworths said it had a range of payment terms with suppliers, depending on the product, however fresh food suppliers and many small suppliers were typically paid within 14 days.
A spokesman for Coles said the supermarkets' shorter payment move was not linked to the ombudsman's pending report but part of its ongoing work to improve its relations with suppliers.
Coles' shorter payment times apply to suppliers who submit electronic invoices.
The supermarket's statement on Friday included a comment from Tasmanian salad dressings supplier Leo Miller, managing director of Red Kelly.
"We are currently on 60-day payment terms so this decision will help our cashflow enormously and mean we can pay our suppliers more quickly," Mr Miller said.
Coles said it will help suppliers who use paper-based invoicing and want to switch to electronic billing to do so during the next three months.
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