Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Glen Bartholomew, ABC NewsRadio.
20 July 2022
Subject: Payment Times Reporting Regulator’s report
Glen Bartholomew:
Nearly half of big businesses are failing to pay small business suppliers on time, putting increased pressure on companies already stretched due to the COVID pandemic. The Payment Times Reporting Regulator has published its second report looking at the payment policies of 7000 businesses with an annual turnover of more than $100 million. And it found the majority were not meeting their own payment terms offered to small business. With just under half of big companies paying over 80% of their suppliers by their own agreed deadline.
Bruce Billson is the Australian Small Business and Family Enterprise Ombudsman and joins us now. Thanks for your time.
Bruce Billson:
Great to be with you, Glenn.
Glen Bartholomew:
What do you make of this latest report finding? Is it a continuation of bad practice we’ve seen for some time?
Bruce Billson:
Look, it’s poor form from the nation’s biggest businesses. They are saying that their terms, their payment times are going to be better, but the performance hasn’t improved at all. There’s still more than half who aren’t meeting their own deadlines. This is really impacting on the cash flow of small business suppliers into those bigger corporate firms. And we know cash flow is king. It’s such a vital ingredient of small business survival, particularly at these challenging and uncertain times.
Glen Bartholomew:
Why is it happening? What reasons are given?
Bruce Billson:
Well, it’s hard to pick. We are wading through the data that’s actually provided by the big corporates. There are a couple of, you know, challenging areas. We’ve seen through our own assistance call line that in particular sectors of the economy there are particular challenges -construction, transport, postal and warehousing sectors and some sections of retail. And these seem to correlate with where there are industries really grappling with, I suppose, challenges in the in the COVID recovery phase, supply chain pressures or, you know, other headwinds in their businesses.
And that seems to be in some part washing through on the timeliness of payment to small business suppliers. But I guess my message, Glen, is that it is no help to a big business not to pay their small businesses on time. Good businesses pay. That’s a vital part of those business relationships. And I’m calling on those big businesses to at least do what they say and also lift what is a fairly mediocre ambition around 30 day payment goals to actually get really serious about this important cashflow challenge for small and family businesses.
Glen Bartholomew:
Is there a particular sector or industry that has a worst performer?
Bruce Billson:
Well, there’s a number that are challenging. I’ll mention a couple that have come up through our own assistance call line where businesses reach out to my office, looking for help with matters, with other businesses and sometimes government. But, you know, there are a number of areas. Construction is one. Some of those areas relate to delays in their supply chain. So that’s a new challenge and that’s really putting pressure on some of those businesses. But, you know, not paying your small business suppliers and contractors in a timely way is no solution. And that’s where we’re really urging big businesses to take that leadership role, respect and care for the small businesses that are a vital part of their business and pay their bills on time.
Glen Bartholomew:
As we say, these are businesses with annual turnover of more than $100 million. They’ve got much deeper pockets than some of their small business suppliers or clients. So when a small business or supplier is waiting on being paid for extended periods, how does it impact their business?
Bruce Billson:
Well, I mean, cashflow is vital to a small business. You can have an accounting profit, but if the cash isn’t coming in, those vital payments that a small business needs to make to their to their own suppliers, to their own team, and meeting their own obligations around employment, superannuation contributions and commitments to the tax office and others. You know, small businesses wake up every day wanting to do the right thing and being paid in a timely way enables them to do that. And that’s why there’s just no upside for anybody not paying small business suppliers in a timely way.
Glen Bartholomew:
Certainly the small businesses wouldn’t get away with it. What needs to be done to fix it Bruce Billson? Does it need to be some sort of harsher penalties for the big businesses that fail to meet such payment deadlines?
Bruce Billson:
Well, I’m calling on the business community to show the leadership and actually nice back swing on what they’re saying they’re going to do, but we need to follow through to see it actually happen. The Business Council itself has recognised how important paying bills on time is to the general business environment. They’ve been looking for their members to sign a pledge to pay businesses within 30 days.
30 days, Glen, isn’t spectacular. It’s mediocre, but it’s better than some of the other payment times. We just need the business community to get serious about this. The government has this Payment Times Reporting Register that surfaces this vital data and I’m doing what I do every day trying to agitate in support of small and family businesses to get this needless challenge addressed, which is well in the gift of big business to deal with.
Glen Bartholomew:
But as you say, it does appear to have been ever thus. I remember talking to Peter Strong from the Council of Small Business. For years he used to complain about things like this. I think I also remember your former colleague Scott Morrison when he was prime minister when the pandemic first hit. One of the first things he did before any government stimulus was announced was address a business lunch. And he said, the best thing you can do is pay your bills on time. He knew there was room to move there.
Bruce Billson:
Yeah, there’s plenty of room to move. I mean, the incoming government’s made some commitments about mandating payment times. I guess the thing that, you know, former prime ministers and those close to the life and experience of small businesses know, 30 days isn’t that much to ask for Glen. There are big corporates who make a virtue out of paying small and indigenous suppliers in as little as five days.
Now that’s great. Those exemplars deserve to be acknowledged for that better practice that they’re leading. But we just need the broader business community to get the simple message – good business pays, delaying the timely payment of your small business supplies serves no good problem and just puts pressure on other parts of the economy when cashflow is really critical for those smaller enterprises.
Glen Bartholomew:
That’s it. When times when you want a bit of stimulus to the economy, this just gets in the way. Very curious indeed. Bruce, thanks for talking to us.
Bruce Billson:
Good to be with you. And your listeners Glen.
Glen Bartholomew:
Great. Bruce Billson, the Australian Small Business and Family Enterprise Ombudsman, calling on corporate Australia to pick up its act.
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