I grew up in a tiny town in the Nullarbor where small business was its lifeblood. My parents were small business owners and, years later, so was I. Decades later, I now represent millions of other people just like us, as the Small Business Director at Xero Australia.
In short, I understood from an early age that small business in Australia is ubiquitous.
My time working in enterprise did nothing to diminish that. We had thousands upon thousands of small-business customers. Chances are, you do too – but you already know that. They pay for your goods and services, which means they inadvertently fund your existence.
It’s always made sense to me, then, that enterprise, big business and small business should strive to better understand one another. It’s a mutually beneficial cycle. Everybody wins.
The conversations worth having
I’m not writing this letter to apportion blame around the fact that I see avoidable imbalances, such as late payments, everyday; imbalances that impact those millions of small businesses and their ability to make business and purchasing decisions, which could benefit your organisation.
I do – but instead I want to share accessible information that can break the issues down into meaningful change. Those are the conversations worth having. Because when the daily realities of small business, big business and government are so different, the ability to share information becomes our greatest asset.
The information behind the action
As a cloud-based accounting platform for small businesses and their advisors, with more than a million subscribers across the world, we are uniquely positioned to understand the challenges of the sector, and share them.
That’s how I know hand-on-heart that one of the biggest killers of small business is a lack of cashflow, rather than a failure to produce revenue. I know that late payments can be the difference between taking on a new job, employing a new recruit or shutting up shop.
And it’s how I know that, sadly, lengthy compliance processes within many big businesses and government departments continue to perpetuate this issue.
Painting by numbers
Let’s unpack this with some statistics. An analysis of our combined invoice statistics found that during the six months to March:
- One in five invoices payable by ASX 200 companies to small businesses were overdue by more than 30 days.
- More than 3.8 million invoices were overdue to small businesses around Australia.
When we spoke to 500 Australian small-business owners about this situation, 62 per cent said payment terms over 30 days are unworkable – and their business wouldn’t survive more than three months if all invoices remained unpaid.
The risk for everyone: more legislation
Making a start with a voluntary code
There are other ways. The Business Council of Australia (BCA) has released a Voluntary Supplier Payment Code that binds its signatories to pay small businesses within 30 days of receiving a correct invoice. At least it’s a start to ending the dissonance between big and small business payment.
Now more needs to be done to support and develop the code. Small businesses need big businesses counterparts to step up to what – in the words of those at BCA – could be “a new age of cooperation and mutual respect between businesses – big and small”.
Bridge the gap of understanding
I truly believe in our ability and opportunity to bridge this gap of understanding in our economy.
If we achieve more equal collaboration between big business, government and small business, we can unlock the level of job growth and economic potential that will define Australia’s future.
Now there’s a voluntary code out there with a growing list of signatories, and just one question from me: can you do anything more to help?
Anneliese Urquhart, Small Business Director, Xero
