SmartCompanyWednesday, November 16 2016
In an effort to reduce the serious impact of late payments on SMEs, the Australian Small Business and Family Enterprise Ombudsman is launching a new inquiry into payment times.
The self-initiated Payment Times and Practices Inquiry will aim to identify damaging trends impacting Australian small businesses when it comes to late payments from larger businesses and governments.
The Inquiry’s launch comes off the back of months of consultation conducted by ASBFEO chief executive Kate Carnell to identify the issues plaguing small businesses across the nation.
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“When I began the consultations in March, we found that late payments are at the top of the list of issues facing Australian SMEs,” Carnell told SmartCompany.
“The main issue we were told about was bigger businesses paying very slowly, some of them are pretty draconian in terms of payment contracts.”
“Cashflow problems for small businesses involve more than just a lack of customers.”
One of the aims of the inquiry is to make it easier for small businesses to set their own payment terms, but Carnell says she mainly hopes to “shine the spotlight on what actually is happening”.
“If we make this an issue we’ll hopefully shame some of the big players into fixing up their behaviour,” Carnell says.
“No one we’ve spoken to thinks it’s reasonable for small businesses to be used like banks for larger businesses, so on that basis, we have a lot of support for addressing this issue.”
Carnell and her team will be working with the small business commissioners from Victoria, Western Australia, New South Wales, and South Australia, along with the Council of Small Business Australia and the Australian Institute of Credit Management.
The inquiry will also be looking for input from federal and state and territory governments.
Carnell believes that Australia is “lagging behind” other countries when it comes to late payment terms, referring to successful solutions in the UK and the US that she hopes could be implemented here.
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The inquiry will finish in March 2017, but Carnell hopes that it can become an annual or biannual report so that the figures can be tracked over time.
As a result of the inquiry, Carnell hopes to identify practical solutions, and plans to implement them “quickly and effectively”.