Payment Times

Resolving small business disputes

Olivia Pearce — Tue, 03 Sep 2024 02:07:26 +0000

Resolving small business disputes Olivia Pearce Tue, 09/03/2024 - 12:07

03 September 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Raf Epstein.

ABC Radio Melbourne

Subject: Concern about small businesses being paid, resolving disputes, sleepwalking into a big corporate economy

Raf Epstein

Bruce Billson, former MP, is now the �Թ�� and Family Enterprise Ombudsman. Good morning.

Bruce Billson

Raf, fab to be with you and your listeners, and thanks for your interest in small and family businesses.

Raf Epstein

Some of the numbers in your press release are pretty disturbing. I take it these are numbers from the people who've come to you. What is it like for small business right now?

Bruce Billson

Really challenging. We know even the last full year where tax information is available, 46% weren't making a profit. And that's concerning. But for the million and a half self-employed people, those that do that as their full-time livelihood effort, three-quarters are taking home less than average weekly wages.

So, it's a challenging time. The slowness of growth, the inflation, the change in consumer spending is really hitting some businesses very hard. Others have a business model that's attractive for the times, they're doing okay, but increases in input costs and inability to pass those on is really squeezing margins. And then the issue that you mentioned, worries about getting paid for work they've actually done.

Raf Epstein

So, the money that Bruce's business should pay Raf’s business, because I did work for you, how much is that gotten worse? And just give me some idea of what their problems like?

Bruce Billson

It’s huge. 40% of the cases that come to us looking for help are that ‘Bruce hasn't paid Raf’ example that you alluded to. What we're also seeing is a real doubling of people inquiring about their worries, their stress, that someone that they've done work for might be teetering on insolvency and they might miss out getting paid for work they've already done.

And let's think about that. If you and I were putting the electrical system in Tarneit at a new subdivision, we're worried about being paid. We've laid out for substations, the conduit, the cabling, and so we've got outgoings already. So not being paid is just not about us being paid for our time and our effort, and hopefully a little bit of profit. We've already laid out a lot of money. And then our challenge then can cascade onto someone we owe money to, and you can find that becomes a really significant concern, and that's what's popping up in the inquiries that we're receiving.

Raf Epstein

As Ombudsman, I should mention, actually, it's the �Թ�� and Family Enterprise Ombudsman, so that gives you some sense of who Bruce works for effectively. As Ombudsman, Bruce, do you sort of bash heads together and make sure that Raf does pay Bruce or Bruce does pay Raf. Is that what you do?

Bruce Billson

We aim to. Where it's Raf just wanting to make sure Bruce pays right now, we're not debt collectors. That's not our role. But where there's scope for us to bring the parties together, where communication may have stopped, we get involved.

Raf Epstein

So, you do mediation?

Bruce Billson

Yeah, we do. We have alternative dispute resolution mechanisms. But we also try to tool-up the parties to that transaction with some skills and some tactics that they can deploy. A lot of people that go into business, Raf, the idea of chasing debts probably isn't their number one priority. And not everyone's good at it. So, we actually provide some better practice guidance to say, maybe go about it this way. This will start the conversation. That will get all the documentation that you need in place. And if that doesn't bring about a change and a satisfactory resolution, come to us and we'll get alongside the parties. We're impartial.

We just want to get the matter resolved but get business back to business. And in so many cases where these niggles and grievances arise, the businesses need to keep doing business with each other. So, there's no point having a winner takes all sort of scorched earth approach. We want to get a resolution, make sure the parties are happy with the outcome, or as happy as they can be, get them back to business, and hopefully have those business relationships still intact.

Raf Epstein

On 774 Bruce Billson's the �Թ�� Ombudsman, it's 10 to nine. I'll read this text from Roger, who's in Eltham. Raf, why do you constantly characterise small business as simply cafes, coffee sellers or construction? Small business is a diverse engine. Professional services, consulting, design, transport, logistics, primary production, training, communications, not just family incorporated and not just bloody coffee. That's from Roger.

Bruce Billson

Roger’s on the money there, Raf. It is a diverse space, but it's also what's showing at multi-speed economy for different people because of the different type of business that they're in. Some that are providing digital solutions for other businesses, they're very popular right now because finding efficiencies within the business, using technology to deal better with the business of running the business so more time and the businessperson’s bandwidth can go into delighting customers and growing and nurturing their enterprise.

Raf Epstein

And Bruce without getting too political, if the economy shrinks, which is I think what we're going to get tomorrow, it's not growing as much as it was, still growing, but barely. Does that necessarily mean that those training, communications, logistics, cafes, small business, do they necessarily find it harder if the economy is barely grown. Does one follow the other?

Bruce Billson

Yes, that does happen, but the consequences can be different. There's quite a lot of research that says the economic trauma, if I could use that phrase, tends to strengthen those that are already strong, because they've got the depth of resources, the skill set. It makes newer and smaller businesses more vulnerable. And the other thing that we've seen, and this just isn't in the last window of time, this is over the last decade and a half, Raf, we've actually been sleepwalking into a big corporate economy.

We're seeing the big end of town growing. We recently celebrated Micro, Small and Medium-sized Enterprises Day, and of course, we were really acknowledging and celebrating the two in every five private sector jobs that small business makes possible. But it used to be one in two. We celebrated the one-third of GDP that small businesses make possible, but it used to be 41%. So, we're seeing a contraction there. And what comes with that is those economic opportunities and livelihoods land differently.

People that live outside the capital cities or don't have a big mine in their neighbourhood, they rely on these small and family businesses who give so much economic opportunity, but they're also great contributors in the local community. And when you start sort of taking maybe a cylinder out of the engine room of the economy, it has implications right throughout the community and the economy and the opportunities that people can look forward to into the future, and that's why I get out of bed every day for them.

Raf Epstein

Thanks for joining us today.

Bruce Billson

It's good to be with your Raf, take care.

Raf Epstein

Bruce Billson is the �Թ�� and Family Enterprise Ombudsman.

Concern about small businesses being paid

Olivia Pearce — Mon, 02 Sep 2024 22:20:08 +0000

Concern about small businesses being paid Olivia Pearce Tue, 09/03/2024 - 08:20

02 September 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Emma Hannigan.

ABC Radio Gold Coast

Subject: Concern about small businesses being paid

Announcer

It's a challenging time for many small businesses. If you're the owner of one, what is the biggest stress you are under at the moment? New figures from the Australian �Թ�� and Family Enterprise Ombudsman shows a surge in requests for help from distressed business owners who fear they won't be paid by those who owe them money and are worried about their own ability to meet financial commitments. Reporter Emma Hannigan spoke with the Ombudsman, Bruce Billson, about these concerns.

Bruce Billson

The small business environment's extremely challenging right now. We're seeing a lot of small business owners really concerned about getting paid on time, a wariness about whether other businesses they're dealing with are solvent and also new challenges as more turn to digital platforms to find customers.

Emma Hannigan

What is the main concern for small businesses at the moment?

Bruce Billson

Well, the biggest concern, by quite a margin, is about getting paid. That could be either people receiving goods and services and then not paying in the time that's been agreed, or some contest over whether what was to be delivered, has actually been provided. But either way, we're seeing about 40% of our caseloads relate to delays in getting paid, and that, on top of some big businesses with appalling payment performance for small business suppliers, is a real concern for cash flow-dependent small enterprises.

Emma Hannigan

Speaking of cash flow, what is the flow on effect for businesses if they're not getting paid, or they're concerned about not getting paid?

Bruce Billson

Well, the flow on effect is quite insidious, as it's not only a concern and a problem for the business waiting to be paid. That business also has suppliers and staff that it has to pay. So it can have a compounding effect, a cascading effect, where one business not paying in a timely way can have enormous implications for others, and in some cases, even make the business vulnerable for insolvency. Cash flow is the oxygen of enterprise, and if you not seeing those payments made in a timely way, it really can put the business in a precarious situation.

Emma Hannigan

What kind of impact does this have on the well-being of small business owners?

Bruce Billson

We've seen recent research from Treasury showing that a significant percentage of small business owners are expressing concerns about their own emotional and mental wellness. It's a big responsibility owning and running a business, and then, not only are you dependent on yourself for your own livelihood, but there’s also others that are equally dependent on it. For many business owners, their identity and their sense of purpose is almost central to their reason for being self-employed, and it makes business ownership so much more demanding than retaining a job, for instance. So that's what we see, and we know that there are concerns that people feel overwhelmed. There’s many expectations, and when there's additional challenges, such as not getting paid, that can have a very, very significant emotional impact on business owners.

Emma Hannigan

Bruce, are there policy changes that could be made to ensure that businesses are more stable and secure and don't have these kinds of issues from insolvent suppliers, or the concern about people becoming insolvent?

Bruce Billson

Well, there's probably three things that can be done right now. One is to take timely payment more seriously. I'm pleased that the Government has invested in its payment time reporting framework, but we're yet to see any meaningful improvement in payment performance, with still one in four big businesses taking 120 days or more to pay small business suppliers. That's just shabby performance and action needs to be taken.

Secondly, for the businesses themselves being more alert to the financial condition of parties that they're dealing with. We know the Tax Office is being far more aggressive now in pursuing debts owed by small business. And I think an appropriate step would be for the Tax Office to identify on credit reference platforms just who it is that they're concerned about where there are substantial debts outstanding, and then other businesses can decide on how and when to deal with businesses that have a significant tax debt outstanding.

The third point would be to actually think about contingencies. Understanding that cash reserves for many businesses are depleted, but having some continuity plan, some reserves that can take account of circumstances that aren't what you plan for, and not place the business itself in a difficult situation. I think that could be a positive step also that government and policy makers could support with small businesses.

Announcer

That's the Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson.

How small business can get help

Olivia Pearce — Mon, 02 Sep 2024 22:11:50 +0000

How small business can get help Olivia Pearce Tue, 09/03/2024 - 08:11

02 September 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.

Radio 2CC Canberra

Subject: How small business can get help, insolvency concerns, payment times, solving problems with digital platform providers

Leon Delaney

The latest report from the Australian �Թ�� and Family Enterprise Ombudsman has revealed a 50% increase in requests for help from business owners that fear another business which owes the money may have become insolvent or are therefore worried about their own ability to meet their financial commitments. Joining me now the Ombudsman. Bruce Billson, good afternoon.

Bruce Billson

Leon. Great to be with you and your listeners.

Leon Delaney

Well, this is apparently the most significant, most common challenge that small businesses face, getting paid by other businesses.

Bruce Billson

Certainly from our caseload, and there's about 6500 a year, 40% of those are about just trying to be paid. But also they've taken a slightly sharper focus on what's happening with the other party that they're dealing with. We know that many businesses aren't having a particularly profitable streak right now, that cash flow is a big concern for many. And businesses are hoping, whilst they may have taken all proper care in their own financial arrangements, they haven't gone and done some work or supplied things to another business that's running into trouble, and they might end up not being paid and having to carry the cost of the inputs that help them deliver that goods or service. So that risk of a cascading consequence where the difficulty of one business relates to another being caused, that's a real concern. We've seen noticeable uptick in that kind of inquiry.

Leon Delaney

The construction sector in particular is notorious for that kind of thing, isn't it?

Bruce Billson

It is, and that's why it's such a prominent part of our statistics. I think you and I and your listeners have spoken before about the construction sector, particularly when it's fixed price contracts, and there might be a delay in getting some equipment, some material. Maybe it might be harder getting the trained staff, the tradesmen that you're looking for. And the inflation pressures that we understand and talk about as cost of living pressures, are cost of doing business pressures. And you can find yourself part way through a project, and then all of a sudden, the other party - where we've seen quite a spike in insolvencies in construction - is unable to pay its bills, and then that has enormous impacts on your own business, particularly if you've laid out money to help meet that contractual requirement in the first place. So that's that anatomy of that cascading concern where the financial challenges of one business can have a really significant bearing on another business and their ability to pay their bills.

Leon Delaney

And while it is a feature of the construction sector, it's far from being the only sector where this happens. Other businesses also experience a similar thing, don't they, in sectors such as hospitality and similar types of businesses. What can a business do to protect themselves against that?

Bruce Billson

Well, there's a couple of things, and you're right, it's not just a construction industry thing. Hospitality, where margins are pretty tight at the best of times, it can be really significant there with energy costs really making it more difficult. Input costs, you know, even the interest rates are cost of funds for businesses, become more expensive and customers have less to spend. But even in sectors that are doing well, and we've seen recent results for the major supermarket chains, some big businesses are doing quite well, yet we still know one in four of their small business suppliers are having to wait 120 days to be paid.

So that brings into question, well, what can you do about it? It's pleasing that the government's focused on the Payment Times Reporting Register and actually making that more useful, so that a small business can check what the form is of big businesses and take account of that. There's also a range of credit monitoring services. That might not immediately jump to mind, but let's go back to your example. Just say we were doing a subdivision, there's new ones going on throughout Canberra and the region, and we were putting the electricity services in, if we're forking out money for cabling and conduit and substations and the like, you'd want to be pretty confident that the subdivider is actually able to pay the bills when it comes.

You can check these credit reference websites just to see whether they're late on making payments generally, or whether they've got a particular credit risk attached to them. And then you and I could decide, well, we might do that work, but we might want half the money up front before we even start.

The other thing to think about, too is the Tax Office is up and about. And I'm urging the Tax Office to really be using that credit reference notification process more often, and sooner, so that businesses can take that into account when they're dealing with another business. If that other business owes $150,000 to the Tax Office, I'd be wanting to know that if it did become insolvent, I wasn't going to get trumped by the Tax Office and other secured creditors who are going to get looked after way before we get looked after as a small business. They are a couple of steps you can take, along with a little bit of buffer where that's possible.

Right now, one in four small businesses, Leon, are reported to have no cash reserves, so they're really running close to the wire. If you're able to, the recommendation is six to nine months of operating expenditure put to one side so that you can navigate those choppy waters and survive yourself, even if you are faced with the setback like what we've described.

Leon Delaney

Although it can be difficult to accumulate that buffer when trading conditions are as tough as they are at the moment. Now, you've also reported that there's a significant number of small businesses having a lot of trouble dealing with digital platform providers. And of course, these days, digital platforms are pretty much the platform that businesses operate on, aren't they?

Bruce Billson

They are, and it's the fastest growing type of matter we're being asked for assistance with. You and I might be selling miniature goats. They are pure bread. We've trained them well…

Leon Delaney

You come up with such extraordinary examples, Bruce! Miniature goats. I never thought I was going to go into business selling miniature goats with Bruce Billson, but there you go.

Bruce Billson

And there we are at the Murrumbateman market selling them at market day. But when we're not at the market, we might be promoting the personality of our goats on our website, and then people can buy them through Marketplace or other of these digital platforms. And we might think things are pretty good. But then someone might hack into our account. They might take over our account. They might trash talk miniature goats to our disgust.

But more nefariously, they might get in there and start promoting other websites. We might have a credit card linked to that account, and they start spending our money on other things. We reach out to that platform provider, and we go to the frequently asked questions on their website, and it says, if you can't get into your account, get into your account to tell us you can't get into your account. That’s how nonsensical and unhelpful the current arrangements are. So, we try and get involved and speak to a real person. It shouldn't be that hard. These digital platforms need to do better. They need to have internal dispute resolution and assistance mechanisms so that long live the miniature goats.

But I use that in a facetious way to point to a very significant problem. If that's our only channel to our customers, all of a sudden, our business is down, we've got no way of reaching those customers, no way of supporting them and delighting them. And that could potentially have really big implications for our business into the future.

Leon Delaney

I've certainly heard of people having a business presence on social media, and it is their primary platform for selling. And then, for whatever reason, they lose control of the account, they get their account suspended, and all of a sudden they've got no business, and they've got nowhere to turn.

This point you've made about talking to a real person, this harkens back 20, 30, 40, years ago, Bruce, when I was banging on the table and shouting into a radio microphone about the number of big businesses now that when you ring them up, you get an automated recorded message menu system. And I said back then that what we need to do is pass a law that every major government agency, every major public entity and every big business must, by law, employ a real person to answer the phone and direct the call accordingly to preserve the status of proper customer service. It would solve the problem of customer service and unemployment at the same time by creating all those jobs for people to answer telephones. I think I've still got a case, don't you?

Bruce Billson

Oh, visionary stuff. You were before your time then, you are now. What a cunning idea actually having customer service with someone at the other end to give you service. And that's been a central recommendation of ours. We've gone through various digital platform inquiries. The ACCC has done some spectacular work. We know there's things that aren't working right in these sectors and that's what we've been calling for - effective and timely internal dispute resolution and support mechanisms, including scope to escalate to a real person. And if all else fails, they contact us. We get onto them and the deal we've got with some of these platforms is, look, we can recommend to government that they sting you with enormous costs and set up some complicated, expensive system. Or you can work with us to solve these problems. Your call, but we want to do the best by small businesses that rely on these platforms. And boy, can they do better.

Leon Delaney

I think my rule is probably more relevant than ever now that we're facing the age of chatbots and artificial intelligences. Bruce. Thank you so much, and I'll chat to you again soon.

Surge in �Թ��es worried about being paid

Olivia Pearce — Sun, 01 Sep 2024 23:38:06 +0000

Surge in �Թ��es worried about being paid Olivia Pearce Mon, 09/02/2024 - 09:38

02 September 2024

New figures from the Australian �Թ�� and Family Enterprise Ombudsman reveal a 50 per cent jump in requests for help from distressed business owners who are fearful that another business who owes them money has become insolvent or who are worried about their own ability to meet their financial commitments.

The Ombudsman, Bruce Billson, said payment disputes were an early warning sign of a cash flow problem and can have a ripple effect that threatens the viability of other businesses.

“Cash flow is the oxygen of enterprise, but difficult conditions mean when one party is late in paying, it can cascade through the supply chain,” Mr Billson said.

“Payment disputes are by far the greatest area of concern for small and family businesses and now account for 42 per cent of assistance cases, up from 36 per cent last year.

“The construction industry had the highest number of payment disputes while in the hospitality area the number has tripled over the past 12 months.”

Releasing the annual summary of assistance provided to small and family businesses by the Ombudsman, Mr Billson said there were 6254 requests for assistance in 2023-24, up 10 per cent from the previous year.

The data, published in the Ombudsman’s latest Quarterly Report, shows that since being created eight years ago, ASBFEO has handled almost 47,000 cases, most of which involve disputes small businesses have with other businesses or Australian Government agencies.

“We strive to help small businesses get back to business as fast as possible and pleasingly nearly two-thirds of the cases that come to us are helped quickly by our call centre or assistance team providing useful information and guidance to resolve disputes,” Mr Billson said.

“Some cases take longer and the ASBFEO assistance team provide more intense one-to-one assistance with no-cost or low-cost solutions. This has included arranging alternative dispute resolution, such as mediation.”

The number of requests for help with insolvency increased by 50 per cent. These included people considering insolvency and those concerned that an insolvent business owed them money.

“Over the past year, small and family business owners have become increasingly worried about being paid as they face challenging business conditions which has seen a record number of corporate insolvencies,” Mr Billson said.

“Cost of living pressures for households are cost of doing business pressures for small businesses such as rising input costs such as wages, energy, insurance and rent while the Tax Office has resumed its tougher enforcement approach.

“Many small businesses are drawing on their cash buffers to keep their business afloat. Recent surveys have found nearly one-in-four have no cash reserves while 18 per cent have less than a month’s cash at hand to fulfil their obligations.

“The business owner will usually pay themselves last after paying their bills and staff, so slow payment can needlessly amplify the risks of business ownership.

“For small and family business owners, their identities are interwoven into their business and the stakes are so much higher than just a job. Many have invested a lifetime – and put their life’s savings and family home on the line - to build up their business. Nearly half of outstanding small business debts are secured by residential property.

“New figures from the Tax Office reveal that 46 per cent of small businesses did not make a profit in the most recent year of accounts available. And some three-quarters of self-employed business owners, for whom their business is their full-time livelihood endeavour, are earning less than the average total weekly, full-time wage.”

Mr Billson said small businesses were also crying out for help dealing with Big Tech digital platform providers and disputes involving a digital service now accounted for just over one-in-four new cases.

“The number of cases we’ve seen involving a small business having problem with a digital platform has more than doubled since July 2022,” he said.

“Digital platforms have fundamentally changed the way small businesses connect and sell to their customers. Yet, when there is a problem – such as having your account shut down after being hacked – solving it can be a nightmare.

“In too many cases, when there is a problem, the digital platform providers require a time and resource-poor small business to navigate the most elaborate maze of dead-ends and blockages.

“We have been active in directly seeking resolutions for small and family businesses but some of the delays experienced by small businesses have lasted many months and having someone else access and control their account is devastating for their business and their reputation.

“We are calling for digital platform providers to implement clear, appropriate and standardised procedures for small business dispute resolution with clear escalation points and a real person to talk to.”

About 20 per cent of requests for assistance relate to contract disputes while 9 per cent involve a franchise disagreement, typically relating to contract renewals, breach of franchise agreement or early termination.

“We can give small businesses the skills – and sometimes case management – to resolve a dispute without ending the business relationship. In many cases they want to keep doing business but need to find a way through the dispute,” Mr Billson said.

“We can’t guarantee that every small business will succeed but it is our mission to provide all the help we can for those who want to start, grow or transform a business, and that no business fails because the owners didn’t know about something that might have helped.

“We also provide access to mental health support and tools to help people start and grow a business and make better business decisions. We also offer a Tax Concierge Service for small businesses who have a dispute with the Tax Office.”

Some cases such as those involving insurance, telecommunications, banking and finance, and workplace issues such as health and safety, are referred to other relevant dispute resolution agencies in line with ASBFEO’s legislation that says it is not to duplicate the functions of other government agencies.

“We happily provide a type of triage service to receive the dispute and then assess whether we are best equipped to help or whether the small business will be best served by sending their case, with their permission, to the most appropriate federal or state agency,” Mr Billson said.

Small and family businesses with a dispute can find more information and guidance on the ASBFEO website - asbfeo.gov.au – which also includes resources, check lists, tools, more information about the Tax Concierge Service and the Quarterly Report. They can also subscribe to our newsletter.

CASE STUDIES

*Names have been changed

Mary runs a small civil construction business but one of her customers, another small business, had not paid their $20,000 bill for 180 days.

The delay, well beyond the usual payment terms of 30 days, was having significant flow-on consequences for Mary as it left her without sufficient cash flow to pay her suppliers.

After repeated attempts to contact the company that owed her money and even offering a payment plan because she wanted to keep the other business as an ongoing customer, Mary called the ASBFEO assistance team. A case manager helped Mary to be paid the full amount she was owed.

Julie uses a well-known social media digital platform to run her small business, but she was hacked and locked out of her account.

The hackers used Julie’s credit card that was linked to the account to fraudulently ring up hundreds of dollars of charges. Julie was left stranded because the digital platform told her she needed to log in to her account to report that she was locked out of her account.

Julie is one of hundreds of small business owners who have faced this problem over the past year and, after contacting ASBFEO, we were able to get her account re-instated and the fraudulent charges on her credit card refunded.

Steven’s account was suspended by a digital platform with no reason given. Steve said without access he could lose $20,000 in sales and repeatedly requested a review but was not able to get his account re-instated. He contacted ASBFEO and we convinced the digital platform to undertake another review and it found he had been suspended by mistake and the account was re-instated.

Vicky, who runs an events business, was owed $10,000 by another business who had stopped paying her and had cut off any communication. She called ASBFEO and we provided advice which got the two businesses talking again and they were able to work out a payment plan and preserve their commercial arrangement.

Anthony runs his own TV repair business and contacted ASBFEO when another business he had been working with for five years, suddenly stopped paying him. We helped negotiate a payment plan so both businesses could stay in business.

Matthew took out a loan with a lender who was not a member of the Australian Financial Complaints Authority, so he could pay other debts owed by his small business. After defaulting on the loan, he was at risk of losing his home and contacted ASBFEO. We discovered he had already paid more in loan repayments than the total loan. The lender agreed to waive the remaining debt and remove the security over the home. Before taking out any new loans, Matthew said that he’ll do the quick online check to ensure that a lender is an AFCA member.

MEDIA CONTACT: 0448 467 178 / media@asbfeo.gov.au

Small business headwinds

Olivia Pearce — Fri, 07 Jun 2024 01:52:47 +0000

Small business headwinds Olivia Pearce Fri, 06/07/2024 - 11:52

06 June 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.

2CC Radio Canberra

Subjects: Small business headwinds and need for right-sized regulation, payment times, Commonwealth procurement.

Leon Delaney

The Albanese Labor Government is today trumpeting the passage of its legal measures, its legislation to improve small business payment times. Now, getting small businesses paid on time has been quite a considerable challenge for those businesses for a long period of time. In fact, that is one of the issues that the Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson, has been addressing for quite some time now, including this week in the Senate Estimates. Bruce joins me now. Good afternoon.

Bruce Billson

Leon, great to be with you and your listeners.

Leon Delaney

What was your message to Senate Estimates this week?

Bruce Billson

It was actually a message saying not all small businesses are okay right now. It's a challenging time. You and I have spoken about this before, that what we know in households, the cost-of-living pressures are actually cost-of-doing-business pressures for small and family businesses. But as household budgets are tightened, expenditure, particularly discretionary expenditure, is really contracting. That's really hard for some small businesses at a time they're contending with higher costs for those inputs, energy costs, rents are up, insurance is up, staggering amounts.

It's a pretty challenging time. That was my message to the Senate, along with a plea, I would suggest, to not simply address those headwinds and hopefully take some of the strength of those headwinds out, but to actually put wind in the sales of small business. Think deeply about what could be done to advantage those job-creating, opportunity creating, enterprises that are right throughout our communities.

Leon Delaney

Now, you've addressed a number of issues when you faced the Senate Estimates committee hearing, but amongst them were your concerns about a flurry of new workplace rules and obligations. I'm constantly hearing from organisations such as the Council �Թ�� Organisations of Australia about their concerns about the red tape tangle faced by many businesses. Of course, we hear from governments repeatedly, Yes, we're cutting red tape, but it seems like they don't ever really manage to cut it very far because it's still a problem, isn't it?

Bruce Billson

Well, we're really trying to get governments, lawmakers, regulators, to think about these regulatory impositions in terms of something that's right-sized for a small and family business. What we've seen is some of Australia's largest corporations and even government departments themselves that write the rules, struggle to implement them effectively. There's now stronger penalties for those that intentionally do the wrong thing, yet we're saying it's hard for some small businesses to often know what the right thing is and that we should be thinking about the regulatory imposition in terms of time poor, cash-constrained, small businesses that aren't shrink-wrapped versions of major corporates. There are people trying to create opportunities and forge out some livelihoods, and they do a lot of their compliance work at 10 o’clock at night. Think about these people. Think about this experience and those challenges when we're coming up with what are increasingly complex and sophisticated regulatory requirements that even well-resourced organisations struggle to navigate. Think about how challenging and confronting that is for a smaller business.

Leon Delaney

You also went on to address the issue of timely payments for small businesses. Of course, Julie Collins, the Minister for �Թ��, has today distributed a media release, Passage of reforms to improve �Թ�� Payment Times. What has the government actually passed, and will it be enough to actually improve that situation?

Bruce Billson

Well, it's got partway through the Parliament. I think what the Minister's press release was welcoming was its passage through the House of Representatives. There's still the Senate to deal with the matter, and they sit again around the 24th of this month. What that aims to do is improve the way what's called the Payment Register operates. The Payment Times Reporting Framework, it's about 7,000 of the biggest companies in Australia who are obliged to report on the terms that they offer small and family business suppliers, and then talk about the performance that they actually have in making those timely payments.

What you and I have spoken about before is that that performance is best characterised as woeful. There's still one in 10 businesses waiting over 120 days to be paid. There's about a third that get paid within 30 days. Cash flow, Leon, it's vital for business. It's the oxygen that they trade on. It's no good having a paper profit if you're not getting paid. What the minister's welcomed, and we think this is a step in the right direction, is improvements to that register to make it easier to get data in, but also to get data out, so that you and I might be able to talk about who's doing the right thing and paying their small and family business suppliers well and why others in that industry are really letting the side down.

It's also making sure the data that goes into that register actually means something, and it's not just a whole bunch of fog and confusion. It also gives the regulators some new powers, including to call out those people that are doing well in payment times and those that really need to pull their socks up.

Leon Delaney

On the question of timely payments, when you're at the Senate committee at the Estimates hearing, you pointed out that in many cases, the party that is slow to pay is either a big business or a government department. Now, yes, we understand that big businesses might be tempted to take advantage of their market power and beat up on the little guys. We shouldn't condone it, but we understand why they might be tempted to do that. But a government department is meant to be held to a higher standard of accountability and honourability, isn't it?

Bruce Billson

That’s why we've been urging these considerations to be part of the government being a good customer to the people that are its suppliers. You and I have talked about procurement improvements that we think are necessary. There's a lot asked of businesses that supply to the Commonwealth. We think Commonwealth departments paying in a timely way is not too much to ask in return. In fact, there are mechanisms where late payments are supposed to be recognised with interest to the person that's been paid late. But again, people are concerned about flagging this as maybe having them identified as a problem child, and they don't want to compromise that relationship.

This is an area where hopeful things can improve. But I should also say, Leon, most of the disputes that come to my agency to help to resolve, where they involve payment disputes - and that's 40% of the matters that come through my agency - often it's one small business to another small business as well. We need to just realise that a delay in paying a business may cascade through to that business then delaying its payment to someone else. You and I have talked about how that's caused such mayhem in the construction sector, and we just need to stay on this.

Good business pays. They pay their bills on time, they pay the tax that they owe, and they pay their people correctly, and we should make that a cultural expectation of all those involved in commerce, including where government's dealing with business.

Leon Delaney

The other thing that you raised with the Senate Estimates committee was your recent inquiry into the impact of reforms to Commonwealth Procurement Rules. You said that the response from the government to your recommendations was, well, you described it as a missed opportunity. What has the government got wrong?

Bruce Billson

Well, basically, it would have been nice for them to pick up our recommendations. Government procurement, particularly in this town, Leon, is a very hot topic, and it doesn't take long if you're talking around in Canberra and greater region to have a business that's had a poor experience dealing with government.

It's good if you're part of the in-crowd, if you know how the system works, you know where to look for opportunities. But if you and I were a small IT firm with some really good capacity we wanted to see if we could supply to the government, how would you know where those opportunities were? Are what's asked of us reasonable expectations? Do the officials handling those procurement processes actually know how the rules work? Are we actually bringing meaning to slogans like Future Made in Australia and the Buy Australian Plan? All very worthwhile objectives. But are we actually backing that up with procurement processes that actually give small and family businesses half a chance to win that work. Or are people going to always play safe and go to the big end of town? That's what we were addressing. We put forward a number of recommendations. The response from government was tepid at best, shall we say, and basically saying, look, we think we've got all this sorted. A little tweak there, a little tweak here. It'll be right. It'll be great. No, it won't. We were looking for a more decisive response from government. We didn't get.

Leon Delaney

Bruce, as always, a great pleasure. Thanks very much for chatting today.

Bruce Billson

Thanks, Leon.

TRANSCRIPT: Payment problems for small business, helping small business resolve disputes

Emily Carter — Thu, 01 Feb 2024 03:24:35 +0000

TRANSCRIPT: Payment problems for small business, helping small business resolve disputes Emily Carter Thu, 02/01/2024 - 14:24

01 February 2024

TRANSCRIPT

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Jeremy Jones.

ABC Radio Capricornia

Subjects: Payment problems for small business, helping small business resolve disputes,

Jeremy Jones

Well, it's hard to think of something more frustrating: do the work, the long hours, not taking other work in the meantime, and then your client doesn't pay. Maybe they felt the price was too much or the cost of materials shocked them. Or maybe it was a miscommunication about the desired outcomes. Well, what can you do? What's the right thing to do? If you feel like you're dealing with someone dodgy, you want the whole world to know that they're dodgy. Or you just want your money. Or you just want the whole thing to go away.

Well, disputes about being paid, troubles with digital service providers and contract bills and franchise agreements are the top four issues where small businesses have sought out the help of the Australian �Թ�� and Family Enterprise Ombudsman over the past six months. The Ombudsman, Bruce Billson, joins me now. Bruce, thanks for your time.

Bruce Billson

Jeremy, fab to be with you and how good’s that 1976 song Rich Girl from Hall & Oates. A blast from the past and Fraser, on your board, was telling me you're in great form today. But one thing we can be pretty confident about is that small business owners, female ones, are not rich girls. In fact, nearly half didn't make a profit in the last full taxable year and about 73% who have their business as their full-time livelihood pursuit, take home less than full-time average weekly earnings. So, we're talking about people not rolling in rivers of gold. And yet, still, some people don't want to pay them in a timely way.

And this is the majority of concerns that are raised with my office. We set about trying to equip the business with some know-how to approach and raise the concern and, if necessary, get involved with some case management to get a better outcome and hopefully get businesses back to business.

Jeremy Jones

How common is pay disputes?

Bruce Billson

Spectacularly common. That's the sad thing. Two out of every five matters that comes to my agency involve a payment dispute.

Occasionally it might be a small business with another small business. It might be bound up with some misunderstandings about what each other wanted the other one to do.

It may be a big business simply exercising their market muscle and saying, we'll pay you when we're ready to.

Or worse, we've had some examples where we've had to lean into an arrangement with a government department and a small business supplier where they frankly just hadn't got around to paying them.

And it what's interesting, Jeremy, is, a bit like Hall & Oates, they want to keep the relationship going. In many cases it's a valued client. They just want to be paid. We try and share some know-how, give some tips on how to raise it in a way that will get an outcome, but hopefully keep relationships intact.

Jeremy Jones

It's interesting that you bring that up. I feel some people might think going higher to maybe the Ombudsman, it feels like you might be putting a nuclear bomb to the relationship because you're sort of taking it outside of, maybe the four walls of an email chain or something like that. How can you get desired outcomes when people have sort of taken their frustrations to the next level?

Bruce Billson

What we do is we work with the businesses that contact us. We've just ticked over our 40,000^thbusiness that we've assisted since the agency was established. We try and equip the business themselves to deal with and approach the matter first so that we don't need to necessarily get involved, but we are happy to share the know-how.

You touched on one of the dynamics that plays out here Jeremy. People can get frustrated; they can get emotional. And let's remember, a small business is often the identity, the personality, is more than just a job for a business owner. It's really what they're about. They put their heart and soul, and many mortgaged their houses for it. So, it's a big deal and that can also heighten the emotion.

And so, one of the things we do is we say don't raise that you felt slighted or shaded by a phone call you had two years ago and throw that into the mix.

Focus really on what the issue is, what the concern is you want to resolve and what a good outcome looks like and stay to that and engage. We help them prepare their own letters, some tips on how to raise a claim that they're supposed to be getting paid and no one's paid them. And really try and go about it in a classy way to give it the best chance to get resolved and then people can get back to business.

If that doesn't work, we’ll get involved and shoot a note out saying, hang on, you've engaged this contractor to tile a commercial building, and they've done all the good work and you haven't paid. What's the go here? What's your take on this? We're impartial, but we want to get an outcome. And they might just say, look, you know, few things are going on. How about I pay half of it now and I've got money coming in, I'll pay the next half next week. We will check in with the other party, make sure that works for everybody and away we go.

Jeremy Jones

I really appreciate the point you made there as well. In these situations, I can imagine for some it might be the contractor and then you go, well, you took a long lunchbreak when you did this and you did this, he did this. All these things that are maybe relevant to there being hard feelings, but not actual to the context of the situation in the payment at hand.

Bruce Billson

And not helpful to getting an outcome. You know, you start throwing in emotion, hurt feelings - we've all got those. But we try to stay professional. We try to stay focused. A real problem-solving lens. Our first step is to provide the business with some know-how, some approaches, some resources that are on our website, www.asbfeo.gov.au which is the acronym of Australian �Թ�� and Family Enterprise Ombudsman.

Jeremy Jones

Bruce, a big thanks for joining us this morning.

TRANSCRIPT: Helping small business resolve disputes, payment times, digital platforms

Emily Carter — Wed, 31 Jan 2024 23:45:33 +0000

TRANSCRIPT: Helping small business resolve disputes, payment times, digital platforms Emily Carter Thu, 02/01/2024 - 10:45

31 January 2024

TRANSCRIPT

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.

Radio 2CC Canberra

Subject: Helping small business resolve disputes, payment times, digital platforms

Leon Delaney

Small businesses in Australia have sought the assistance of the Australian �Թ�� and Family Enterprise Ombudsman for issues including such things as payment disputes, trouble with digital service providers, contract battles, franchise disagreements. The list of disagreeable things that can occur to a small business appears to be endless. Joining me now, the Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson. Good afternoon.

Bruce Billson

Leon. Awesome to be with you and your listeners.

Leon Delaney

Thanks very much for joining us today. So how have you been able to help small businesses over the past year?

Bruce Billson

Well, the good news is we've been very busy and in fact, in the last few months, we ticked over our 40,000 small business we 've been able to help. And that's largely through dispute resolution services, better practice guidance to help people avoid getting into difficulty in the first place, and also at times calling out the behaviour of some big businesses and occasionally governments that aren't really playing that nice with their small business customers.

Leon Delaney

Well, obviously, if the big if the big businesses and the even the governments don't play nice, who's going to set an example for everybody else?

Bruce Billson

Well, we hold up a bit of a mirror at some times and say, look, really, is this the way we want to be treating really important suppliers that are small and family businesses?

And what we're seeing more and more of Leon, is two out of every five of the disputes that come to my office involve payment disputes. So, this is just where people just want to be paid for the work that they've done. And in some cases, the bigger parties - big business or others - are just a bit tardy making those payments, not realising that cash flow is the oxygen of enterprise. Those businesses are hanging out for that payment. They've often incurred costs to provide goods and services as part of their contract, and they just want to be paid.

So, two out of five of those and worryingly, Leon, in many cases, parties are just slow to pay because they can. And the small the family business lacks the market power and presence to be able to bring about a change in that behaviour.

Leon Delaney

It's that power imbalance that really does create the problem, isn't it? And when you talk about bigger businesses not realising the importance of cash flow. Oh no, they do, they do. But they're only concerned about their own cash flow, not somebody else's. That's the problem. In some instances?

Bruce Billson

It is, and that's partly why we were really positive that the government looked at the payment times register.

We'd been calling out pretty shabby business performance where, in some cases, one in four were taking over 100 days to pay. This just isn't right. And what's happening is this is increasingly becoming a focus, even overseas there's campaigns like ‘Good Business Pays’ where they hold up information in public view to show who is doing the right thing and who's gaming their market power. So, there's stuff going on there, but it's still happening. It's still a concern.

Although digital service platforms are the fastest growing area of disputes we've been involved with.

Leon Delaney

Yeah, we've spoken about dealing with digital platforms on a previous occasion and of course in the modern business environment, there's no escaping the need for digital engagement at some level, is there?

Bruce Billson

Well, that's right, and it's changed everything for many small and family businesses. The way in which they identify and engage with their customers is through a digital platform. Some of those platforms are really helpful in bringing the eyeballs and customers to maybe a new business or a niche business that doesn't have endless amounts of cash to go out and market and find those valued customers.

But the flip side is if something doesn't go right, Leon, can you imagine how annoying it is that your accounts on one of these platforms might have been hacked? It's been shut down, but to actually register a concern and get it fixed, you've got to get it to the very account that’s no longer available to you.

That's the ultimate run around. And that's why we've been saying to these digital platforms, come on, guys, you can do better than that. Have internal dispute resolution mechanisms. Have available a real human to speak to, where you know the frequently asked questions don't solve the problem and if all else fails work with us just to make sure those enterprising men and women can stay in business.

Leon Delaney

This question of having a real person to speak to, I mean, this has been a phenomenon now that's been expanding for a couple of decades. I remember years ago I was thumping the table, suggesting that if I was handed the job of dictator of Australia, one of the first things I would do would be to pass a law requiring all government entities and large businesses and corporations to make sure that the phone is answered by an actual human being, which would solve two problems: the problem of customer service and it would also provide more jobs. I mean, really it's a win-win, isn't it?

Bruce Billson

Leon that's a cunning plan of yours.

But that's the challenge. You often see technology helping to guide a call to where it needs to be. If your concern is about the high-rating Canberra talk show, push 1 for Leon Delaney. If you want to talk to a handsome radio jock, push 2 for Leon Delaney.

But at some point you get to a problem where the frequently asked questions, the automated sort of effort to resolve, isn’t there and you just want to talk to someone to get it done. And that's at the heart of what we try and do Leon. Many people want to keep these business relationships going. They've got a dispute, they want it sorted and then they want to get back to business, hopefully with the relationships intact. And that's the approach that we take. And it's a terrific service.

Leon Delaney

Now, in terms of payment terms, I note that the �Թ�� Minister Julie Collins, who now has your old job, has provided information today showing that payment times have improved, but there's more work to do.

It turns out, according to the figures that she's presented today, the average payment time for a big business to pay a small business is now down to 35.4 days. So, in other words, it's more than 30 days. And that represents an improvement? It's still too long, isn't it?

Bruce Billson

I welcome the Government's interest and Minister Collins’s activity involved in highlighting these things. We've been banging on about it for some years, saying, 30 days is hardly shooting the lights out. We know during COVID that some of the biggest businesses in the country were paying their small, family and indigenous suppliers within three or four days. So, it's not a question of whether they're capable of doing it. It's whether there's the appetite to do so?

And what we think would help, and what a recent review of the payment times reporting system has suggested, is we need some way of proclaiming, naming and shaming. Really putting a spotlight and praising those that are doing well, naming those that are not doing so well and maybe pointing to some of their competitors saying, well, they can pay in seven days, why can't you?

And then for those that are really shabby, and I mentioned earlier some are 120 days plus, we need to get out there to say this is just not classy. This is unacceptable. This is really misusing a dominant market position for the harm of small and family business suppliers.

Leon Delaney

If somebody is running a small business and they're running into some of these obstacles, how do they get in touch with your dispute resolution service?

Bruce Billson

Jump on our website www.asbfeo.gov.au No Leon, that is not a foot fungus from Latin America, that’s the acronym of Australian �Թ�� and Family Enterprise Ombudsman. There’s some helpful tips there, because many times it's about building capability to raise concerns. But then if that doesn't work and people have had a go at it, then we can get involved in our brilliant case managers can really look for a path forward to resolve the dispute.

Leon Delaney

Fantastic. Bruce, thanks very much for your time today.

Bruce Billson

Great to be with you.

Leon Delaney

Thank you. Bruce Billson, the Australian �Թ�� and Family Enterprise Ombudsman.

TRANSCRIPT: review of Payment Times Reporting Act (ABC News Radio)

Emily Carter — Fri, 01 Sep 2023 05:42:08 +0000

TRANSCRIPT: review of Payment Times Reporting Act (ABC News Radio) Emily Carter Fri, 09/01/2023 - 15:42

01 September 2023

TRANSCRIPT

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Glen Bartholomew.

ABC News Radio

Subject: review of Payment Times Reporting Act

Glen Bartholomew

The Federal Government says it's committed to ensuring more corporations pay small businesses on time, saying they recognise how important cashflow is to smaller enterprises, who often lack the market power to negotiate better outcomes.

The Government's just released the findings of an independent review of the Payment Times Reporting Act that was done by former small business minister Dr. Craig Emerson.

Bruce Billson is the �Թ�� and Family Enterprise Ombudsman and he joins us now. Good afternoon.

Bruce Billson

Glen, fab with you and your audience.

Glen Bartholomew

First, remind us just how much of a problem is big business not paying up on time?

Bruce Billson

A very substantial problem. We've got some that are setting the right tone and respecting their small and family business suppliers and paying, you know, within 30 days.

That's hardly shooting the lights out, but it's certainly commercially reasonable in most cases. But you've got about a quarter of small businesses waiting 120 days to be paid on their invoices. Now, that's outrageous. We think some big businesses are doing it because they can and the reporting register designed to highlight these things has not really lived up to its billing and that's why Dr. Emerson's recommendations are very much welcomed by me and many in the small business community.

Glen Bartholomew

I want to look at some of those recommendations shortly and that register. But what percentage of complaints does this constitute for your organisation?

Bruce Billson

Well, for us, two out of every five of the matters that are raised with me as a business to business dispute involve payment times.

Glen Bartholomew

40%?

Bruce Billson

40%, so that's quite a number. And then there's occasionally some that are involving government departments where they're a little bit tardy paying their small business suppliers.

Cash flow is the oxygen of enterprise. If small businesses can't get paid in a timely way, that has ramifications for their viability and also their capacity to pay the people they need to pay as well.

Glen Bartholomew

That's it, the knock on effects. How do they survive then? Because not everybody's going to give them a three-month grace period.

Bruce Billson

It's a challenging time where a lot of businesses are trying to weigh up the terms on which they engage with their big business customers. Not many have that flexibility, pricing in the cost of having to fund that delay in getting paid. And that's a working capital imposition. And in some cases, sadly, too many of them feel powerless to change the behaviour of their big business customers and suffer because of it.

Now, thankfully, the Business Council of Australia, they've called out through their own policies a 30-day payment expectation but sadly too many aren't living up to that ambition and that's what Dr. Emerson's report was focusing in on.

Glen Bartholomew

You've been calling for big business to get much better at paying their small business clients for some time. What does this review reveal? Has it improved at all?

Bruce Billson

Look, it's barely moved and it certainly hasn't improved adequately and there’s way too many big businesses not paying their small and family businesses in a timely way. Those suppliers deserve the respect of being paid in a timely way and good businesses pay.

Glen Bartholomew

Is this a deliberate action then? Are they just being used as a, you know, a cheap source of capital and finance?

Bruce Billson

Yeah, in many cases, that's exactly what it is. And also many small business suppliers to big businesses don't have too many options. You can't actually say, okay, if this big business customer isn't going to pay me in a timely way, I might supply someone else. That's often not an option for small and family businesses, Glen, so they're really they're really stuck with it.

And that's why it's really a reputational issue for big businesses to do the right thing to pay their small business customers and suppliers in a timely way, just like they're expected to pay their tax, just like they're expected to pay their workforce properly.

Glen Bartholomew

Not too much to ask. Payment Times Register does exist, but Dr. Emerson's been pretty scathing about it. He's called for an overhaul of the ‘poorly functioning’ and ‘almost useless’ Payment Times Register. This was what's supposed to put pressure on big business to pay up. Why hasn't it been effective?

Bruce Billson

The ambition behind it was one of transparency. The hope that having this register and then revealing the performance of different companies would see the companies themselves realise that there are reputational implications from not paying in a timely way. It hasn't lived up to that ambition, Glen.

The data is like a fog that you need to wade through. I think my agency is the only organisation in the country that tries to make sense of it. It's extremely complicated. There's many data fields, many of them not telling you much and then adding to the confusion. Now we need to clear the air and make sure that that information is clear.

And then Dr. Emerson has called for an agency like mine to have a role in saying, who is doing a good job and who's not? Let's name and proclaim the good ones and let's name and shame those that are letting the economy down and their small business suppliers.

Glen Bartholomew

He wants a culture of prompt payment through an explicit responsibility being given to publicise the worst and best payers. Name and shame, as you say, the worst offenders. It sounds like that is perhaps a logical extension of your remit. Does that system operate anywhere else in the world?

Bruce Billson

Yes, it does in the UK and we've modelled some of our early work on the UK, which interestingly is a ‘good business pays’ campaign. That's where the data that's collected through the regulator is shared, it's analysed and then it's published in a way that's readily consumable by small businesses thinking about supplier choices, but also for customers who might make a choice of getting behind those companies that are doing the right thing by their small and family business supply chain.

Glen Bartholomew

And warning for businesses to watch out who they do business with because they might be waiting a while to get paid. If they know what a company's track record is, they might maybe choose to go elsewhere with their business. The review makes 14 recommendations, encompassing 23 actions for government. How confident are you that that action will follow anytime soon?

Bruce Billson

Look, I'm optimistic because I know our minister, Minister Collins, is very serious about this. The Government's made some commitments around improving payment time performance, and I know there's two and a half million small and family businesses cheering on the recommendations from Dr. Emerson and looking forward to an early positive response from the Government.

We'll keep our work going Glen. This is a topic I've been banging on about for a long time because the performance has been pretty shabby by big business. Many speak to me and say they are doing better and want to do better, but they want to be recognised for doing better and then have those that are letting the side down appropriately held to account.

Glen Bartholomew

Yep, some talk is cheap. We need to see some action at last. We'll keep talking about it. Bruce Billson, thanks for joining us.

Bruce Billson

Great to chat with you, Glen.

Glen Bartholomew

The �Թ�� and Family Enterprise Ombudsman, Bruce Billson. Perhaps might be the agency that gets to name and shame the companies who just don't do the right thing in terms of paying their smaller suppliers.

ENDS

OMBUDSMAN WELCOMES PAYMENT TIMES REVIEW BY DR CRAIG EMERSON

Olivia Pearce — Fri, 01 Sep 2023 01:41:50 +0000

OMBUDSMAN WELCOMES PAYMENT TIMES REVIEW BY DR CRAIG EMERSON Olivia Pearce Fri, 09/01/2023 - 11:41

01 September 2023

The Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson, wholeheartedly supports the call to overhaul the Payment Times Reporting Act and welcomes recommendations to make the data more useful for small business.

“Finance is the oxygen of enterprise. Cash flow is vital to the survival of small and family businesses, yet this sobering review by Dr Craig Emerson finds there has been no significant improvement by big business to pay their small business customers in a timely way,” Mr Billson said.

“The original intention of the Payment Times Register was to improve the performance of big business but it has so far failed. Dr Emerson has produced a thoughtful road map to get this ambition back on track.”

The review was released today by �Թ�� Minister Julie Collins and Mr Billson commends Dr Emerson and the review team for their engagement, rigour and perspicacity.

“Almost 40% 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,” Mr Billson said.

“Sadly, Dr Emerson’s key finding aligns with what we have been saying, that the performance of many big businesses in paying small businesses has been woeful.”

Dr Emerson’s report finds: ‘there is no empirical evidence of a significant improvement in the payment terms and times of large businesses in respect of their small-business suppliers’.

It also says: ‘Large businesses that do not pay their small-business suppliers quickly are using their market power to obtain a cashflow advantage over small-business suppliers, regarding them as a cheap source of finance’.

“Dr Emerson’s call for an overhaul of the ‘poorly functioning’ and ‘almost useless’ Register constrained by the legal design, aligns with our recommendation to the inquiry for the Register to provide meaningful information that can easily be understood and applied by small business, regulators and the community.

“We agree with Dr Emerson the Register has ‘untapped potential’ that can be realised through the reforms he has suggested to deliver more accessible, accurate and useful information that will give big business an incentive to lift its game.

“ASBFEO is the only organisation that has dedicated time and resources to unpack the current complicated data-sets and tell the grim story of poor payment performance and a lack of meaningful improvement since the Register was established.

“Off the back of our work to analyse and communicate the economy-wide big business payment performance to their small business suppliers, we have championed a ‘good business pays’ campaign approach modelled on and informed by the UK experience and are well placed shine a spotlight on individual business performance.

“We particularly note that some big businesses told Dr Emerson’s review they wanted to be able to compare their performance against others.

“Given that desire, we particularly welcome Dr Emerson’s recommendation to ‘foster a culture of prompt payment’ through an explicit responsibility being given to ‘publicise the worst and best payers’.

“We are ideally placed to bring into operation a “name, proclaim and shame” scheme that drives better payment performance in support of a more effective and reformed Register.”

As Dr Emerson’s review says: ‘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.’

“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,” Mr Billson said.

“A similar system operates in the UK and 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.’”

Mr Billson said he also supported other recommendations in the review to better protect the rights of small businesses regarding unfair trading practices and unfair contract terms, facilitating the inclusion of a dedicated small business channel into the Australian Government’s proposed Designated Complaints function and increasing the adoption of eInvoicing.

MEDIA CONTACT: 0448 467 178

TRANSCRIPT: Payment Times

Emily Carter — Mon, 19 Jun 2023 01:23:04 +0000

TRANSCRIPT: Payment Times Emily Carter Mon, 06/19/2023 - 11:23

19 June 2023

TRANSCRIPT

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Neil Mitchell.

3AW

Subject: Payment times

Neil Mitchell

If you're a small business and you're chasing a bill for five or $10,000 that can be a key part of your income. Bruce Billson is the Australian �Թ�� and Family Enterprise Ombudsman. He was federal Minister for �Թ�� back in 2013-15 and he's had a number of small businesses himself. Bruce Billson, good morning.

Bruce Billson

Neil, fab to be with you and your listeners.

Neil Mitchell

I’ll be very personal first, what do I do?

Bruce Billson

Well, a couple of things. Before you start, be careful about what the terms are you're offering. So if you're not sure, or you check those credit websites and you think someone might be a little suss, maybe get a nice juicy deposit before you start doing work, that's an important preventative step.

But if you are caught in a situation, one of the best things is to actually raise it directly. Now, this might sound a little bit weird, Neil, but a lot of business owners, they know chasing up outstanding invoices isn't their strong suit. And they might put it off, put it off, put it off, because they've got so many other things on their mind and it can actually get away from them. And so actually saying, ‘hey, you owe me some money, here's the amount that you owe me, when can I expect a payment?’ and start that more formal engagement to get paid, that's pretty important.

If all else fails, you can give myself or the Victorian �Թ�� Commissioner a call, and we'll see what we can do to sort of nudge an early resolution.

Neil Mitchell

I'd love to tell you the two companies. I've been telling them once a month for six months, ‘hey fellas, you haven't paid, c’mon, what’s going on?’ Anyway, take me out of it, seriously. To me it's irritating, but it's not going to drive me to the wall. This actually could really hurt small businesses.

Bruce Billson

Absolutely. Finance and cash flow is the oxygen of enterprise. If you don’t get the money coming in, no matter how well your business is going on paper, it might look profitable, but if you're not getting the cash in, you've got a real problem. And overwhelmingly, businesses fail because of poor cashflow. And this is central to that challenge.

With big businesses, sometimes they just play dirty because they can.

Neil Mitchell

Really?

Bruce Billson

Absolutely. This has been a long standing concern, even though good organisations like the Business Council of Australia have said businesses should pay within 30 days. And let's be frank, 30 days isn’t spectacular. It's pretty ordinary. But you think that's not too much to ask. But the Payment Reporting Register suggests that only about a third of our big businesses are paying their small and family business suppliers within 30 days. And staggeringly, Neil, there's one in four who pay in 120 days or more. Now that is just straight shabby. That’s a misuse of market power and that is not good corporate responsibility. Big business should lift their game and perform.

Neil Mitchell

So big business is doing that just to sit on the money a bit longer. They use the money a bit longer themselves?

Bruce Billson

That's right. There's no question about them being able to pay sooner. During COVID some of the more, you know, notorious slow payers, and, you know, let's think of the mining industry as an example Neil, if we speak very quietly, they were known not to be that great, but during COVID they really lifted their game. They were paying small and indigenous businesses in three or four days. And we know some can do that because a number do.

The question is why don't the others? And the answer, sadly, is because they don't have to. And so there's a federal Payment Reporting Register that the previous government introduced. It was hoping that a bit of sunlight, a bit of transparency, might see people lift their game. But it's so darn complicated, Neil. I think mine's the only agency in the country that spends 15 hours of computer programmers trying to make sense of it. And the current government is looking to review it and make it more effective.

Neil Mitchell

Okay, well, that's complicated, but the principle isn't complicated is it? Be fair, pay quickly.

Bruce Billson

We have this slogan: good business pays. They pay their staff appropriately. They pay their taxes in a timely way and they pay their suppliers in a timely way. And that's part of being a good business in the Australian economy.

Neil Mitchell

What industry’s worst?

Bruce Billson

Well, it probably comes as no screaming surprise, the big manufacturing businesses. Only about one in seven of their businesses pay within 30 days. Then it's construction and you've seen some of those stories, Neil, about the pressure in the construction sector where margins are tight and there's supply chain pressures, hard to get staff, hard to get projects completed and therefore hard to get paid. This is washing its way through. Then retail and hospitality.

Neil Mitchell

Have we at least sorted out governments and councils, you know, public servants. Do they pay quickly?

Bruce Billson

They’re better. At the federal government level they've got a really strong commitment to paying small business customers on time. It gets a little bit complicated if you're a small business supplying to a bigger business that has the contract with the Commonwealth and there's some procurement reporting obligations there, that can be a bit clunky.

Victoria also has similar commitments and local government through the �Թ�� Friendly Council program make a commitment to pay in a timely way.

Hopefully that’s setting the tone. We think there's a little more daylight needed Neil, where we blow sunshine the way of those that are doing the right thing, so they get that glow. But for those that are just shabby in their payment, we need to make that an issue of corporate governance that they're just embarrassed about their poor performance. And I think there's some scope there as well.

Neil Mitchell

Thank you so much for your time... Are you missing Canberra?

Bruce Billson

I'm actually based in Canberra now... It was minus one, I think, this morning. That was natural exfoliation of the skin. But, you know, happy to be getting up each day trying to do good things for small and family businesses. So that gives me plenty to jazz my day.

Neil Mitchell

Thank you very much. Bruce Billson, Australian �Թ�� Family Enterprise Ombudsman, formerly Minister for �Թ��.

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