It was a case of “I’ll see you and I’ll raise you”. No sooner had the Business Council of Australia dealt its hand on big business screwing small business suppliers – by stretching out payment terms as far as 120 days – that the Greens raised the stakes.
On Thursday, the Greens announced they would introduce legislation to force companies to pay within 30 days or else face penalties. Come on Labor, come on LNP. This is a no-brainer.
It’s game-on for payments reform, and it’s about time. In recent years, many multinationals and large local corporations have stretched payment times from 30 days out as far as 120 days, egged on by “procurement consultants” whose advice is to exploit their customers as a bank so they can make higher profits in their treasury departments.
US food giant Mars even concocted a scheme to charge its suppliers interest instead of paying them on time – the idea being that if Mars’s suppliers were having cash-flow problems because Mars was stringing them out for three months, now Mars could sting them with a finance facility on top to whack them even harder.
It is a smart move, and commendable too, for the BCA to come up with its Australian Supplier Payment Code under which signatories agree to pay their suppliers within 30 days.
The signatories are named here. They include Rio and BHP, AGL, Sydney Airport, Exxon, the big four banks, Qantas and Coca-Cola Amatil. But where are the others, not just the rest of the BCA’s members, but the slew of multinationals who operate in Australia?
Unilever is a BCA member, also a culprit when it comes to keeping its suppliers waiting at least 90 days. EY is on the list but where are the other business advisers KPMG, PwC, Deloitte and Accenture? Are they advising on procurement, how big clients can earn more interest if they treat their customers like a bank?
Where is the supermarket duopoly of Coles and Woolies which banks large interest margins by clinging onto suppliers’ invoices for as long as possible?
Where are Fonterra and Kellogg’s? Outed in this publication mid-last year for pushing payment terms from 90 days to 120 days, neither of these two are on the BCA list.
Reform to payment terms is a a gimme. Small business is the biggest part of the economy, the biggest employer. Faster payment times will not only keep small businesses alive, it will speed up the movement of money across the entire economy.
It seems the BCA may have moved to head-off calls for legislation. Indeed it would be a good thing to avoid legislation and for all big businesses to join the BCA list. As yet, only a fraction of members have joined and many multinationals are not members.
New York, a world bastion of commerce, brought in laws last year to stop small contractors being fleeced. In Europe and the UK there has been signifidant reform. Politically, it is practical. All political parties ought to have this in their manifesto by the next election. Big businesses may donate but they don’t vote. Hundreds of thousands of small business people do.
The move by the BCA arose from the Inquiry by the Australian Small Business and Family Enterprise Ombudsman’s into Payment Times and Practices.
In turn, this inquiry arose after a number of stories here which, in turn arose because small business people and readers touched base with their stories. These contacts are to be applauded.