Large companies refuse to reveal payment times
Large corporations such as David Jones and Vodafone are reluctant to reveal the time frames in which they pay their small business suppliers, an ASBFEO report has revealed.
In November 2018, Minister for Small and Family Business, Skills and Vocational Education Michaelia Cash requested that the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) conduct a review of payment times, to measure the effects of late or extended payment practices on the cash flow of small businesses and family enterprises in Australia.
Consultations were held with large businesses in the mining, construction and engineering, food, liquor and hardware retail, food supply and telecommunications sectors, revealing a persistent trend in Australia of payment times being extended beyond usual industry standards.
"We received over 2,400 surveys from small and family businesses across the country raising issues on late payments and long payment times," ASBFEO Kate Carnell said.
One of the key learnings arrived at from the review is the hesitancy of some of Australia’s most well-known companies to be open about their payment terms and, more importantly, how often they actually meet those terms, Ms Carnell explained.
The companies that publicly refused to confirm how long they take to pay suppliers include Amcor, Baby Bunting, Bunnings Group, David Jones, Slater & Gordon, a2 Milk, Vodafone and Wesfarmers.
Ms Carnell confirmed that another issue encountered during the review is that, despite having small business supplier definitions, some large businesses could not identify how many of their suppliers were small businesses.
"This significant finding underlines the critical need for an independent annual reporting framework that tracks the performance against payment terms of large Australian and multinational corporations and government entities," Ms Carnell said.
"It also points to the need for the government to modernise business registers so small business suppliers can be more easily identified."
In November last year, the government announced its suppliers will be paid within 20 days for contracts up to $1 million by 1 July 2019 and it will develop an annual reporting framework requiring large businesses over $100 million in turnover to publish their payment information.
"Where large corporations delay payment to their small business suppliers, small business cash flow is unpredictable and presents significant difficulties in their ability to access and service finance," Ms Carnell warned.
"Cash flow is king to small business – poor cash flow is the primary reason for insolvency in Australia."