ASBEFO inquiry into payment times and practices
The Australian Small Business and Family Enterprise Ombudsman (ASBEFO) is currently undertaking an inquiry into payment times and practices in Australia, 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 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 approximately 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.
You can read more about the inquiry, view the Inquiry Issues Paper, and provide your feedback, at http://asbfeo.gov.au/inquiries/payment-times-and-practices.