Tuesday, June 25, 2024

Big businesses “woeful” payment times revealed

Only three out of 10 big businesses pay their small business customers within 30 days while nearly one-quarter take more than 120 days to pay up, according to new payment times data.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson said this is a “woeful performance” and “is bitterly disappointing news for small and family businesses to start the year”.

“This needs to be taken more seriously. Finance is the oxygen of enterprise. Cash flow is vital to these small and family businesses. There is abundant scope for big businesses to lift their game and they should.”

No improvement

The Payment Times Reporting Regulator has released the latest data on payment performance of more than 7000 big businesses, many with a turnover of more than $100 million.

Analysis of that data by the ASBFEO reveals there has been virtually no improvement by big business over the past six months. It shows:

  • 24% of big business take more than 120 days to pay their small business suppliers
  • 9% take between 61 and 90 days to pay
  • 36% take between 31 and 60 days to pay
  • 18% take between 21 and 30 days to pay
  • 13% pay their bills in fewer than 20 days

Big businesses operating in manufacturing and retail trade sectors were among the worst performance in paying their small business suppliers. Only 15% of manufacturing businesses paid their small business suppliers within 30 days and only 24% of big businesses in retail trade paid small businesses within 30 days.

The Payment Times Reporting Regulator, Mary Jeffries, noted in the Regulator’s update accompany the data: “It is concerning that register data indicates payment terms and payment performance have not materially improved since the commencement of the scheme”.

Needless harm

Mr Billson said about 40% of the requests for assistance to the ASBFEO relate to payment times.

“A vast number of big businesses just aren’t meeting the mark and it’s causing needless harm and cashflow challenges for small and family businesses who are waiting too long to have their invoices paid,” Mr Billson said.

“Small and family businesses have kept their side of the deal by providing goods and services, so big business should do the right thing and pay bills in a timely fashion.”

Mr Billson said he looked forward to the review announced late last year by the Australian Government of the Payment Times Reporting Act, which is being chaired by former minister Dr Craig Emerson.

It is looking at ways to improve payment times and terms for small businesses and will consider the introduction of mandatory payment times.

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