The information was released by the Australian Small Business and Family Enterprise Ombudsman Bruce Billson, who said it is a ‘woeful performance and is bitterly disappointing news for small and family businesses to start the year’.
“Nearly one-quarter of big businesses taking four months or more to pay their bills is just not acceptable and there is little sign of improvement by the worst performing businesses,” he said.
“This needs to be taken more seriously. Finance is the oxygen of enterprise. Cash flow is vital to these small and family businesses. There is abundant scope for big businesses to lift their game and they should.”
The Payment Times Reporting Regulator released the latest data on payment performance of more than 7,000 big businesses, many with a turnover of more than $100 million.
Analysis of that data by the ASBFEO revealed there has been virtually no improvement by big business over the past six months.
The results revealed that 24 per cent of big businesses take more than 120 days to pay their small-business suppliers, nine per cent take between 61–90 days to pay, 36 per cent take between 31–60 days to pay, 18 per cent take between 21–30 days to pay, and only 13 per cent pay their bills in fewer than 20 days.
Big businesses operating in manufacturing, construction, and retail trade sectors recorded the worst performance in paying their small-business suppliers.
In this sector, only 15 per cent of manufacturing businesses paid their small-business suppliers within 30 days while in the big construction businesses, only 18 per cent paid small businesses within 30 days and only 24 per cent of big businesses in retail trade paid small businesses within 30 days.
The best performers were big businesses operating in public administration and safety, but it was still only just over half (51 per cent) of small-business invoices paid within 30 days.
“It is concerning that register data indicates payment terms and payment performance have not materially improved since the commencement of the scheme,” said Payment Times Reporting Regulator, Mary Jeffries.
Mr Billson said because payment practices have not improved across recent reporting periods, ASBFEO will also explore how the register can be used by small-business suppliers, investors, advisers, supply chain managers, and other stakeholders to incentivise improved payment performance by large businesses.
Mr Billson said about 40 per cent of the requests for assistance to the ASBFEO relate to payment times.
“A vast number of big businesses just aren’t meeting the mark and it’s causing needless harm and cashflow challenges for small and family businesses who are waiting too long to have their invoices paid,” Mr Billson said.
“At a time when small and family businesses are facing headwinds, big business can play their part.
“Small and family businesses have kept their side of the deal by providing goods and services, so big business should do the right thing and pay bills in a timely fashion.
“Delaying the timely payment of your small business suppliers just puts pressure on other parts of the economy when cashflow is critical for those smaller enterprises and is nothing more than a crude display of power imbalances.”
ASBFEO’s analysis of the payment times data is based on big business entities that have paid 80 per cent of their invoices within a given time frame.
ASBFEO’s analysis excludes entities that have not paid invoices to small businesses in the reporting period. These entities account for nearly one-quarter of records on the Payment Times Reports Register.
The register includes original reports and their revisions. ASBFEO’s analysis uses the most recent available report for each reporting period. It excludes original reports if a revision has occurred.
