The Australian Smal Business and Family Enterprise Ombudsman has revealed a large number of big corporates have failed to respond to the ombudsman’s request for information on payment times to suppliers in the small business space.
The Review of payment terms, times and practices report, released today by the ASBFEO, surveyed 2400 small and family businesses and 250 major corportions across the country raising issues on late payments and payment times.
ASBFEO Kate Carnell said the report found some large corporations are reluctant to reveal the timeframes in which they pay their small business suppliers.
“One of our key learnings from this 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,” Carnell said.
“Despite having small business supplier definitions, some large businesses could not identify how many of their suppliers were small businesses.
Carnell said the findings underline 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.
“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,” the ombudsman said.
Carnell said small businesses continued to be hampered by late payments, pushing some to the brink of bankruptcy.
“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.
“Cash flow is king to small business – poor cash flow is the primary reason for insolvency in Australia.”