Early Finding Highlights Pitfalls of Late Payments
An inquiry investigating payment times and practices in Australia is in full swing with preliminary findings confirming that big businesses and some governments are taking longer than ever to pay small businesses.
Early results from the Inquiry – which is being conducted by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) in partnership with state-based Small Business Commissioners (SBCs), the Council of Small Business Australia (COSBOA), the Australian Institute of Credit Management (AICM) and the Institute of Public Accountants (IPA) – has found almost 50 per cent of small businesses experience late payments on at least half of the bills owed to them.
The Inquiry has also found the practice of late payments is getting worse, with around 60 per cent of small businesses reporting an increase in the trend over the past 12 months. Almost 70 per cent report that the practice has reduced business profitability, with many business owners acknowledging it has a serious impact on their mental health given the added stress and anxiety late payments – and the associated cash-flow problems – can trigger.
Based on the Inquiry survey data, it’s becoming quite clear that big businesses – particularly large multi-nationals – are exploiting the power imbalance that exists in their relationship with small business people who simply aren’t in a position to argue for better payment terms – or to demand immediate payment – for fear of destroying their relationship with the larger company.
The Inquiry has also found the practice is not limited to one sector, with the impact of extended and late payments rippling through the entire economy.
Small businesses have until the end of February to have their say. Those who would like to contribute to the Inquiry can do so by completing a survey which can be found at: www.asbfeo.gov.au.
An Inquiry Issues Paper is also available on the website. Those wishing to provide feedback on the Issues Paper can do so by emailing: firstname.lastname@example.org or by contacting the SBC in their state.