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Australian Small Business and Family Enterprise Ombudsman 4 mins read

19 June 2023

Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Neil Mitchell.

3AW

 

Subject: Payment times

 

Neil Mitchell

If you're a small business and you're chasing a bill for five or $10,000 that can be a key part of your income. Bruce Billson is the Australian Small Business and Family Enterprise Ombudsman. He was federal Minister for Small Business back in 2013-15 and he's had a number of small businesses himself. Bruce Billson, good morning.

Bruce Billson

Neil, fab to be with you and your listeners.

Neil Mitchell

I’ll be very personal first, what do I do?

Bruce Billson

Well, a couple of things. Before you start, be careful about what the terms are you're offering. So if you're not sure, or you check those credit websites and you think someone might be a little suss, maybe get a nice juicy deposit before you start doing work, that's an important preventative step.

But if you are caught in a situation, one of the best things is to actually raise it directly. Now, this might sound a little bit weird, Neil, but a lot of business owners, they know chasing up outstanding invoices isn't their strong suit. And they might put it off, put it off, put it off, because they've got so many other things on their mind and it can actually get away from them. And so actually saying, ‘hey, you owe me some money, here's the amount that you owe me, when can I expect a payment?’ and start that more formal engagement to get paid, that's pretty important.

If all else fails, you can give myself or the Victorian Small Business Commissioner a call, and we'll see what we can do to sort of nudge an early resolution.

Neil Mitchell

I'd love to tell you the two companies. I've been telling them once a month for six months, ‘hey fellas, you haven't paid, c’mon, what’s going on?’ Anyway, take me out of it, seriously. To me it's irritating, but it's not going to drive me to the wall. This actually could really hurt small businesses.

Bruce Billson

Absolutely. Finance and cash flow is the oxygen of enterprise. 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 cashflow. And this is central to that challenge.

With big businesses, sometimes they just play dirty because they can.

Neil Mitchell

Really?

Bruce Billson

Absolutely. This has been a long standing concern, even though good organisations like the Business Council of Australia have said businesses should pay 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. 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, Neil, 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.

Neil Mitchell

So big business is doing that just to sit on the money a bit longer. They use the money a bit longer themselves?

Bruce Billson

That's right. There's no question about them being able to pay sooner. During COVID some of the more, you know, notorious slow payers, and, you know, let's think of the mining industry as an example Neil, if we speak very quietly, they were known not to be that great, but during COVID they really lifted their game. They were paying small and indigenous businesses in three or four days. And we know some can do that because a number do.

The question is why don't the others? And the answer, sadly, is because they don't have to. And so there's a federal Payment Reporting Register that the previous government introduced. It was hoping that a bit of sunlight, a bit of transparency, might see people lift their game. But it's so darn complicated, Neil. I think mine's the only agency in the country that spends 15 hours of computer programmers trying to make sense of it. And the current government is looking to review it and make it more effective.

Neil Mitchell

Okay, well, that's complicated, but the principle isn't complicated is it? Be fair, pay quickly.

Bruce Billson

We have this slogan: good business pays. They pay their staff appropriately. They pay their taxes in a timely way and they pay their suppliers in a timely way. And that's part of being a good business in the Australian economy.

Neil Mitchell

What industry’s worst?

Bruce Billson

Well, it probably comes as no screaming surprise, the big manufacturing businesses. Only about one in seven of their businesses pay within 30 days. Then it's construction and you've seen some of those stories, Neil, about the pressure in the construction sector where margins are tight and there's supply chain pressures, hard to get staff, hard to get projects completed and therefore hard to get paid. This is washing its way through. Then retail and hospitality.

Neil Mitchell

Have we at least sorted out governments and councils, you know, public servants. Do they pay quickly?

Bruce Billson

They’re better. At the federal government level they've got a really strong commitment to paying small business customers on time. It gets a little bit complicated if you're a small business supplying to a bigger business that has the contract with the Commonwealth and there's some procurement reporting obligations there, that can be a bit clunky.

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 Neil, 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. And I think there's some scope there as well.

Neil Mitchell

Thank you so much for your time... Are you missing Canberra?

Bruce Billson

I'm actually based in Canberra now... It was minus one, I think, this morning. That was natural exfoliation of the skin. But, you know, happy to be getting up each day trying to do good things for small and family businesses. So that gives me plenty to jazz my day.

Neil Mitchell

Thank you very much. Bruce Billson, Australian Small Business Family Enterprise Ombudsman, formerly Minister for Small Business.

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