'Massive ramifications': Payments register to scrutinise big business

Emma Koehn
February 14, 2019
The Age
A new payment-times investigator is on the cards, with the federal government asking small businesses for feedback on creating a register to track how long it takes big businesses to pay smaller suppliers.
Small and family business minister Michaelia Cash announced consultation on the payments reporting scheme on Wednesday, setting wheels in motion for companies with turnover of $100 million or more to be required to publish how long it takes them to clear invoices.
In a discussion paper on the plan, small businesses have been asked to weigh in on whether they’d prefer big businesses to publish their payments history on their own websites or through a centralised database.
The report outlines the types of information that may have to be reported under the scheme, including a company’s standard terms of payment and their performance against this promised benchmark.
It’s suggested the administrator of the payments tracker would have new investigative powers to look into concerns including “systemic poor payment practice if evidence of this arose from reported data”.
Penalties would apply to businesses that refuse to play ball with the program, with the Department of Jobs suggesting a possible ban from tendering for Commonwealth contracts.
Small business and family enterprise ombudsman Kate Carnell talks about how small businesses are being controlled by multinational companies.
Council of Small Business Organisations Australia chief executive Peter Strong says the plan must keep bigger businesses accountable.
“How do we make sure someone hasn’t just promised and then crossed their fingers?” he says.
Cutting non-compliant businesses out of government tendering would be one way to force the hand of larger operators, he says.
“In the end, they [late paying businesses] are rorting competition – and people’s mental health is suffering.”
Prime Minister Scott Morrison made the promise to overhaul small business payments last November, after investigations by Australia’s small business ombudsman revealed that chasing late payments was pushing many to the edge.
Chasing late payments is the most common type of legal dispute that founders find themselves in, with the cost of resolving these late invoices costing into the hundreds of thousands of dollars.
‘Massive ramifications’
Small businesses have started 2019 in a precarious cash-flow position. Accounting platform Xero’s February small business insights reports show the number of cash-flow-positive businesses dropped by 1 per cent year-on-year in December.
Credit reporting agencies have flagged a handful of sectors as facing increased risks to solvency due to delayed payments, and slow payment times have “massive ramifications”.
“Retail is getting absolutely smashed, the construction and building sectors are having multiple issues and manufacturing has been slammed in Australia as well,” says the founder of CreditorWatch, Patrick Coghlan.
“The first ones to get affected here are always small businesses. And for them, this is about mortgages and school fees. It has a very close link to their personal lives,” he says.
Consultation on the payment-times scheme comes just weeks after the Business Council of Australia announced a number of large new signatories to its voluntary payments code.
Coles and Woolworths have now joined the supplier payments code, committing to pay smaller suppliers within 30 days.
There are now just over 70 signatories to the code.