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ASBFEO launches review of supply chain financing

The ASBFEO has launched a review of the impact supply chain finance has on the small business and family enterprise sector.

ASBFEO launches review of supply chain financing
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  • Maja Garaca Djurdjevic
  • October 31, 2019
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The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has launched a review to examine the ways in which small and family businesses can use supply chain financing to manage cash flow and fund growth.

It will also look at the products being used by big business to offset extended payment times.

As part of the Ombudsman’s review into payment times, consultations with large businesses revealed that supply chain finance arrangements were being offered as an option for earlier payment to suppliers. Since then, the ASBFEO has reported a significant number of small businesses contacting the office in relation to supply chain financing issues. 

“Supply chain finance is a legitimate and effective tool to free-up cash flow for small and family businesses,” ASBFEO Kate Carnell said.

“However, it is totally unacceptable for big businesses to use supply chain financing arrangements as a replacement for reasonable payment terms being offered, 30 days or less from invoice.”

The ASBFEO’s latest review is expected to provide a clearer picture on the range of supply chain finance options available on the market and which industries are using these products.

“More large businesses are offering supply chain finance to small businesses and we are keen to find out what’s driving that," Ms Carnell said.

“The review will investigate whether supply chain finance is being used by big business as a means to stretch out formal payment terms and as a strategy to manipulate the reporting of working capital and cash reserves.”

An interim report is expected to be released by the Ombudsman in March 2020, followed by a full report by the end of April 2020.

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