Small businesses need big firms to lift their game
Only about a third of large firms pay small and family businesses within 30 days, says the ASBFEO.
Small businesses need the large firms they are dealing with to improve their payment times as economic tightening and returning insolvency rates begin to bite.
“Finance and cash flow is the oxygen of enterprise,” Mr Billson said in an interview on 3AW.
“If you don’t get the money coming in, no matter how well your business is going on paper, it might look profitable, but if you’re not getting the cash in, you’ve got a real problem, and overwhelmingly businesses fail because of poor cash flow. And this is central to that challenge.”
“With big businesses, sometimes they just play dirty because they can.”
Mr Billson said approximately only a third of large businesses were meeting payment within 30 days, haemorrhaging smaller organisations’ cash flow and finances.
“This has been a long-standing concern, even though good organisations like the Business Council of Australia have said businesses within 30 days, and let’s be frank, 30 days isn’t spectacular. It’s pretty ordinary, but you think that’s not too much to ask,” he said.
“But the Payment Reporting Register suggests that only about a third of our big businesses are paying their small and family business suppliers within 30 days. And staggeringly, there’s one in four who pay in 120 days or more.”
“Now that is just straight shabby. That’s a misuse of market power and that is not good corporate responsibility. Big business should lift their game and perform.”
ASBFEO said the worst performing industries when it came to payment times were big manufacturing firms with only about one in seven paying within seven days, followed by construction.
However, Mr Billson was optimistic about the improvements in payment times particularly in the public sector and government and believed for change to occur the issue needed to become a corporate governance issue, particularly with the re-invigorated focus on ESG issues.
“At the federal government level they’ve got a really strong commitment to paying small business customers on time,” he said.
“Victoria also has similar commitments and local government through the Small Business Friendly Council program make a commitment to pay in a timely way.”
“Hopefully that’s setting the tone. We think there’s a little more daylight needed where we blow sunshine the way of those that are doing the right thing so they get that glow. But for those that are just shabby in their payment, we need to make that an issue of corporate governance that they’re just embarrassed about their poor performance.”
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