28 July 2016
Late payments can trigger an early demise
Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell says late payments are putting significant and unnecessary strain on Victoria’s small business owners, adding that the issue must be addressed for the sake of the state’s economy.
Speaking at the launch of the Victorian Small Business Festival, Ms Carnell said the majority of small business failures are by far a result of poor cash flow, with slow payments from customers or clients, a leading factor.
“There’s more than half a million small businesses operating in Victoria; they account for more than 95 per cent of all businesses in the state,” Ms Carnell said.
“They employ thousands of people and are fundamental to maintaining a strong economy, yet quite often they’re doing all of this with one hand tied behind their back simply because their customers aren’t paying them on time,” she said.
Ms Carnell said the need for a nation-wide inquiry into the issue was becoming more and more apparent, with survey after survey on the issue showing that businesses – namely the big end of town – are delaying payments to those that can least afford it; small-to-medium sized enterprises.
“These findings were reinforced recently by a small business consultation project undertaken by the ASBFEO office, which identified late payments as one of the most significant handbrakes on small business productivity,” Ms Carnell said.
“As a result, we have started preliminary work ahead of a formal inquiry, the details of which I plan to announce in the very near future,” she said.
Ms Carnell said she intends to work closely with the state’s Small Business Minister Philip Dalidakis, to help combat the growing problem by identifying sensible and practical solutions.
“Currently, there’s billions of dollars owing to small businesses as a result of outstanding invoices. This money needs to be freed-up so mum-and-dad operators can get on with the job of simply running their small business,” Ms Carnell said.
“SME’s are described as the engine room of the economy; it’s a big reputation to live up to, so we need to do all we can to ensure they have the freedom to grow, innovate and employ,” she said.