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TRANSCRIPT

Australian Small Business and Family Enterprise Ombudsman 5 mins read

 

1 September 2023

TRANSCRIPT

Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Glen Bartholomew.

ABC News Radio

 

Subject: review of Payment Times Reporting Act

 

Glen Bartholomew

The Federal Government says it's committed to ensuring more corporations pay small businesses on time, saying they recognise how important cashflow is to smaller enterprises, who often lack the market power to negotiate better outcomes.

The Government's just released the findings of an independent review of the Payment Times Reporting Act that was done by former small business minister Dr. Craig Emerson.

Bruce Billson is the Small Business and Family Enterprise Ombudsman and he joins us now. Good afternoon.

Bruce Billson

Glen, fab with you and your audience.

Glen Bartholomew

First, remind us just how much of a problem is big business not paying up on time?

Bruce Billson

A very substantial problem. We've got some that are setting the right tone and respecting their small and family business suppliers and paying, you know, within 30 days.

That's hardly shooting the lights out, but it's certainly commercially reasonable in most cases. But you've got about a quarter of small businesses waiting 120 days to be paid on their invoices. Now, that's outrageous. We think some big businesses are doing it because they can and the reporting register designed to highlight these things has not really lived up to its billing and that's why Dr. Emerson's recommendations are very much welcomed by me and many in the small business community.

Glen Bartholomew

I want to look at some of those recommendations shortly and that register. But what percentage of complaints does this constitute for your organisation?

Bruce Billson

Well, for us, two out of every five of the matters that are raised with me as a business to business dispute involve payment times.

Glen Bartholomew

40%?

Bruce Billson

40%, so that's quite a number. And then there's occasionally some that are involving government departments where they're a little bit tardy paying their small business suppliers.

Cash flow is the oxygen of enterprise. If small businesses can't get paid in a timely way, that has ramifications for their viability and also their capacity to pay the people they need to pay as well.

Glen Bartholomew

That's it, the knock on effects. How do they survive then? Because not everybody's going to give them a three-month grace period.

Bruce Billson

It's a challenging time where a lot of businesses are trying to weigh up the terms on which they engage with their big business customers. Not many have that flexibility, pricing in the cost of having to fund that delay in getting paid. And that's a working capital imposition. And in some cases, sadly, too many of them feel powerless to change the behaviour of their big business customers and suffer because of it.

Now, thankfully, the Business Council of Australia, they've called out through their own policies a 30-day payment expectation but sadly too many aren't living up to that ambition and that's what Dr. Emerson's report was focusing in on.

Glen Bartholomew

You've been calling for big business to get much better at paying their small business clients for some time. What does this review reveal? Has it improved at all?

Bruce Billson

Look, it's barely moved and it certainly hasn't improved adequately and there’s way too many big businesses not paying their small and family businesses in a timely way. Those suppliers deserve the respect of being paid in a timely way and good businesses pay.

Glen Bartholomew

Is this a deliberate action then? Are they just being used as a, you know, a cheap source of capital and finance?

Bruce Billson

Yeah, in many cases, that's exactly what it is. And also many small business suppliers to big businesses don't have too many options. You can't actually say, okay, if this big business customer isn't going to pay me in a timely way, I might supply someone else. That's often not an option for small and family businesses, Glen, so they're really they're really stuck with it.

And that's why it's really a reputational issue for big businesses to do the right thing to pay their small business customers and suppliers in a timely way, just like they're expected to pay their tax, just like they're expected to pay their workforce properly.

Glen Bartholomew

Not too much to ask. Payment Times Register does exist, but Dr. Emerson's been pretty scathing about it. He's called for an overhaul of the ‘poorly functioning’ and ‘almost useless’ Payment Times Register. This was what's supposed to put pressure on big business to pay up. Why hasn't it been effective?

Bruce Billson

The ambition behind it was one of transparency. The hope that having this register and then revealing the performance of different companies would see the companies themselves realise that there are reputational implications from not paying in a timely way. It hasn't lived up to that ambition, Glen.

The data is like a fog that you need to wade through. I think my agency is the only organisation in the country that tries to make sense of it. It's extremely complicated. There's many data fields, many of them not telling you much and then adding to the confusion. Now we need to clear the air and make sure that that information is clear.

And then Dr. Emerson has called for an agency like mine to have a role in saying, who is doing a good job and who's not? Let's name and proclaim the good ones and let's name and shame those that are letting the economy down and their small business suppliers.

Glen Bartholomew

He wants a culture of prompt payment through an explicit responsibility being given to publicise the worst and best payers. Name and shame, as you say, the worst offenders. It sounds like that is perhaps a logical extension of your remit. Does that system operate anywhere else in the world?

Bruce Billson

Yes, it does in the UK and we've modelled some of our early work on the UK, which interestingly is a ‘good business pays’ campaign. That's where the data that's collected through the regulator is shared, it's analysed and then it's published in a way that's readily consumable by small businesses thinking about supplier choices, but also for customers who might make a choice of getting behind those companies that are doing the right thing by their small and family business supply chain.

Glen Bartholomew

And warning for businesses to watch out who they do business with because they might be waiting a while to get paid. If they know what a company's track record is, they might maybe choose to go elsewhere with their business. The review makes 14 recommendations, encompassing 23 actions for government. How confident are you that that action will follow anytime soon?

Bruce  Billson

Look, I'm optimistic because I know our minister, Minister Collins, is very serious about this. The Government's made some commitments around improving payment time performance, and I know there's two and a half million small and family businesses cheering on the recommendations from Dr. Emerson and looking forward to an early positive response from the Government.

We'll keep our work going Glen. This is a topic I've been banging on about for a long time because the performance has been pretty shabby by big business. Many speak to me and say they are doing better and want to do better, but they want to be recognised for doing better and then have those that are letting the side down appropriately held to account.

Glen Bartholomew

Yep, some talk is cheap. We need to see some action at last. We'll keep talking about it. Bruce Billson, thanks for joining us.

Bruce Billson

Great to chat with you, Glen.

Glen Bartholomew

The Small Business and Family Enterprise Ombudsman, Bruce Billson. Perhaps might be the agency that gets to name and shame the companies who just don't do the right thing in terms of paying their smaller suppliers.

ENDS

 

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