She encouraged other businesses to practice the same process. Coles has announced that from July 1 that they’ll be reducing payment times to within 14 days for businesses, with a turnover of up to $1 million.
“I congratulate Coles’ management for their leadership on this issue, and call on other big businesses to follow Coles’ lead and reduce their own payment times to small business suppliers,” Carnell said.
The ASBFEO is currently undertaking an inquiry into payment times and practices in Australia, with preliminary findings indicating small businesses have little – if any – power to influence payment terms in their agreements with larger companies.
“The inquiry has found that payment times have become worse in the last 12 months, with large multi-national companies being the worst offenders. In fact, some large companies have moved payment terms to as long as 120 days!” Carnell said.
“72 per cent of small businesses say they simply have to grin-and-bear-it when supplying goods and services to a large corporation, which is why Coles’ decision to reduce their payment times is so significant,” she said.
“Cash-flow is king for small businesses, so for a big player like Coles – one of the country’s largest supermarket retailers – to take affirmative action on this is a welcome move that will make a big difference in the lives of hundreds of small businesses.”
Coles’ decision was in accordance to a pledge from Telstra, who recently moved to lessen the time in terms of paying their small business suppliers from 45 days to 30 days or less.
“I commend both companies for their responsiveness on this issue; we want payment times to be as low as possible so there’s always room for improvement, but their changes now serve as a call-to-action to other large businesses to make it a priority to pay small businesses as quickly as possible,” she said.
“Our inquiry process is in its final stages; we have consulted widely with industry groups, as well as businesses large and small, to determine the extent of the problem, and the possible solutions to correct the imbalance that exists in this space between big and small operators.”
The ASBFEO’s final report will be released within weeks.