Handwriting Text Supply Chain. Concept Meaning Network Between A
Credit: Handwriting text Supply Chain. Concept meaning network between a company and suppliers in producing a product Ready to launch rocket lying smartphone. Startup negotiations to begin.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell, has criticised big business practices in a position paper with regards to the key preliminary findings of her office’s Supply Chain Financing Review.
The position paper issued by the ASBFEO details it findings and makes a suite of draft recommendations to be finalised before a full report is handed down at the end of March.
“Supply chain finance is a legitimate and effective tool that can be used to free-up cashflow for small and family businesses,” Carnell said. “However, our Review has found that too many big businesses have extended payment times and then offered supply chain finance. This practice severely impacts small business suppliers and is totally unacceptable.”
A key finding in the ASBFEO’s position paper is that the definition of a small business continues to be a major blockage and a unified approach would be beneficial to small businesses.
“There are too many small businesses that have to wait too long to get paid,” Carnell said. “This is, in part, because the definition of small business is wide open to manipulation under the Supplier Payment Code. Even putting aside the issue of manipulation, the Supplier Payment Code is voluntary. There is no compliance monitoring and it’s actually unenforceable.”
In its draft recommendation, the ASBFEO’s office says the Supplier Payment Code be replaced by the Payment Times Reporting Framework, and that this framework should be “enforced by an appropriately funded and proactive entity”.
Carnell is adamant that all businesses, regardless of their size, should be paid in 30 days and that supply chain finance should be accessible for every small business that is looking to be paid sooner than is currently the case.
“Rates should be set across markets and not through the use of technology aimed at targeting and squeezing small business suppliers, including those already in distress,” Carnell said. “The question of regulation remains live, and we’ve made a draft recommendation that further consideration be given to whether Supply Chain Finance should be a regulated financial product.”