TRANSCRIPT: Payment Times for Small Businesses with Flow FM

Rikki Lambert

Small Business and Family Business Ombudsman, Bruce Billson. Bruce, how are you today?

Bruce Billon

Pretty awesome to be with you and your audience.

Rikki Lambert

And Bruce, we picked up on something you said about the data that came out on the amount of small businesses, I guess it sounds to me from what I’m reading between the lines, small businesses kind of carry the box for large companies when it comes to overdue invoices.

Bruce Billon

Yes, we are really concerned that paying bills on time is a real problem for small businesses and family businesses. You’ve heard that “cash flow is king” and we see too many small businesses waiting too long to get their bills paid by big business. And, you know, to quote my inner John McEnroe after a bad phone call, “you can’t be serious.”

I mean, there are some examples where large companies take over 120 days to pay their small suppliers. And when the big business industry association, the Business Council of Australia, says 30 days is their policy, well, the vast number of big businesses just don’t hit the mark and that causes unnecessary damage and problems cash for small and family businesses. .

Rikki Lambert

I’ve often heard that in small businesses, when people don’t pay their bills, it’s like you’re the bank, they kind of borrow you because you spent the money. You know, do big companies bank with small companies unwittingly?

Bruce Billon

Look, there’s a bit of that. I mean, if there was no power imbalance and there was a delay in paying a bill to a supplier, the supplier would generally cover the cost of, you know, cash flow, overdraft, large business impacts taking longer to pay. But we know there is a power imbalance. And, of course, the small business does not have this opportunity to pass on the economic consequences of late invoices. So it’s more like big companies are paying late because they can. And that’s not really acceptable.

Good companies pay. They pay their employee rights, they pay their tax obligations, but they also pay their small suppliers and family businesses. They pay them on time. And one of the things, Rikki, that frustrated us a bit is that two-thirds of large companies have adopted their own payment terms where they aspire to pay within 30 days. Now that’s not so impressive. 30 days is in the mediocre zone at best. Thus, two-thirds of them will pay within 30 days, but only one-third actually meet this fairly ordinary ambition.

So there are a lot of opportunities for improvement. And in a time when small businesses and family businesses are facing headwinds, big business can play its part in paying the bills on time and in a timely manner and help bring that money into the business for small and family businesses that did what they said they do. They provided the service, they provided the input – paying the bills.

Rikki Lambert

Could there be a factor here where big companies are simply struggling financially? Is it a bit of a signal that we may be heading into a recession if they do this to small business? Is it only recently, has this data developed or has it been a trend for some time?

Bruce Billon

Listen, this has been an area of ​​concern for some time. And that’s why, you know, initially the Business Council of Australia and some state governments got involved in setting up these payment time codes. We know governments have led the way with timely payment terms or if they can’t pay on time they pay interest. So that was a concern for a while. And that is why you have seen the introduction of regulatory measures. The Payment Times Reporting Regulator does the rounds and accumulates payment times data from the largest companies, around 7,000 of Australia’s largest companies with over $100 million in revenue.

So, Rikki, it’s been around for a while and it’s gotten these kinds of political responses. What’s troubling is that at this point it didn’t seem to make a big difference to actual performance. So what we’re urging big business to do is do the right thing. You know, aspire to do better and then do better because we’ve seen some do a lot better during COVID. But it seems like that focus has waned a bit lately.

Rikki Lambert

Well, that seems to be where it gets a little more glaring as we try to get out of, you know, the conditions imposed during COVID 19, the recession that we’re trying to avoid or maybe that we’re in, I am not quite entirely Of course. But as far as, I guess, small companies trying to get by, but large companies, I think as you sort of implied, they’ve made a lot of money in some cases , even throughout the pandemic.

Bruce Billon

Some have had a really good pandemic, their business model, the situation they’ve been in, even the way customers have behaved and what customers have been looking for. It’s been, you know, really good for a number of big companies. And frankly, Rikki, a number of small family businesses have had a pretty good time during the pandemic for the same reasons.

You know, they were well placed. Their business models responded to blockages and things like that. And frankly, there were new problems to solve. And we know that small businesses and family businesses are really good at it. But seeing these payment delays where some have made a real conscious effort during COVID, being as crummy as they are, is why I can’t help but feel this John McEnroe moment. Big business, you can’t be serious if that’s the best we can do.

We have seen better. It must be better. And I call on big business to embrace the philosophy of good corporate compensation and do better.

Rikki Lambert

So, on that note, is there anything small businesses can do? And despite the trend line we see here, can I contact your office or someone else to try and get a company paid soon?

Bruce Billon

Well, in fact 40% of support requests to our office relate to payment delays. So it is something that is already becoming an important feature. You know it’s not, not our role to be debt collectors, Rikki, but what we do is when there’s a dispute or dispute as to whether services have been provided or in fact the business is in trouble and struggling to make a payment, we can often step in and facilitate a high profile resolution.

But even the Reserve Bank is seeing an increase in the number of small family businesses that are tapping into their own personal savings to keep, you know, the energy and the lifeblood of their business. Thus, the Reserve noted that cash balances have fallen during this calendar year.

This is a sign that businesses need to pay their bills in a timely manner. And this is my call. Urge large corporations to do the right thing and pay their small family businesses in a timely manner.

Rikki Lambert

If anyone wants to reach your office. The web is probably the best way to find you.

Bruce Billon

Yeah. Probably the best way: www.asbfeo.gov.au So that’s the acronym for the Australian Ombudsman for Small and Family Businesses. It is therefore the ASBFEO. Not really a Latin American foot fungus or anything like that. So www.asbfeo.gov.au and we have some useful resources on our website, but also a channel where people can raise particular concerns when they want our help.

Rikki Lambert

Alright, if you want help from the small business version of John McEnroe, that’s how you’ll get it. Bruce Billson, thank you for joining us today on Flow.

Bruce Billon

Rikki, always a treat. Take care of yourself.

/Public release. This material from the original organization/authors may be ad hoc in nature, edited for clarity, style and length. The views and opinions expressed are those of the author or authors. See in full here.


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Elaine R. Knight