Ombudsman’s report shows big business still not paying on time
You may already be aware – as it has attracted much media coverage – that the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has released a Review of payment terms, times and practices across Australia. The self-initiated enquiry looked into the way that large businesses were negotiating payment terms with small business.
Over 250 large business were approached to provide information about their current small business supplier payment terms and conditions. Small businesses were also approached about the reality of the terms offered and if they were being met through an online survey. Over 2,400 surveys were completed. This information gave a valuable insight into the impact of extended terms and late payment of small business. It indicated that late payments remain a key issue for small business
The inquiry indicated that payment times for large business to pay small business were well over 30 days, with an average of 36 days. This delay in payment has a significant impact on small business, increasing cash flow pressure, and leading to impacts to solvency and mental health. Many small businesses were unable to grow their business and increase staff.
Many of the large businesses approached to provide information on their payment terms and conditions did not respond to the inquiry. The main reason for the non-disclosure of this information seems to be its impact on competition, and a reluctance to be transparent about payment terms and if they are achieved.
The Australian Supplier Payment Code, a voluntary national code of fair payment to small businesses came into effect on 1 July 2017. The ASPC, first launched in May 2017 by the Business Council of Australia and the Victorian Government was a voluntary initiative to ensure that small business suppliers are paid on-time and within 30 days of receiving a correct invoice.
I encourage Victorian small business who are experiencing issues with payments to contact us. www.vsbc.vic.gov.au.