Ombudsman supports review to help small businesses

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Bruce Billson, supports the overhaul of the Payment Times Reporting Act.

A recent review of the act by Dr Craig Emerson found there has been no significant improvement by big business to pay their small business customers in a timely way and proposed a road map to get this ambition back on track.

Billson said that Dr Emerson’s key finding aligns with what they have been saying – that the performance of many big businesses in paying small businesses has been woeful.

“Almost 40 per cent of the requests for assistance to our office relate to payment times and payment disputes and as Dr Emerson has noted, late payments are a major source of financial and emotional stress for small-business owners and have flow-on consequences throughout the economy.”

Dr Emerson’s review suggested a system in which the slowest payers would be named and shamed, while the fastest payers would be named and praised.

“Publicising the worst and best payers uses both reputational sanction and reward to influence the payment practices of businesses, since the reputation of a business matters,” stated the review.

A similar system is operational in the UK, which Billson says has been highly effective and has made paying small-business suppliers quickly part of positive corporate reputations and the environmental, social and governance (ESG) obligations of large businesses.

“Celebrating those big businesses that do the right thing will recognise their timely payment performance and put pressure on those with poor payment records. There are still too many big businesses who make small businesses wait an astounding 120 days or more to be paid.”

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