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07 November 2019

Ombudsman launches Review of Supply Chain Financing

Supply chain finance is a growth industry in Australia.

Greater understanding about the impact supply chain financing has on the small and family business sector is needed.

That’s why my office has launched a Review of Supply Chain Financing.

The review will examine the ways in which small and family businesses can use supply chain financing to manage cash flow and fund growth.

It will also look at the products being used by big business to offset extended payment times.

Supply chain finance is a legitimate and effective tool to free-up cash flow for small and family businesses.

However, it is totally unacceptable for big businesses to use supply chain financing arrangements as a replacement for reasonable payment terms being offered; 30 days or less from invoice.

Our review will provide a clearer picture on the range of supply chain finance options available on the market and which industries are using these products.

More large businesses are offering supply chain finance to small businesses and we are keen to find out what’s driving that.

The review will investigate whether supply chain finance is being used by big business as a means to stretch out formal payment terms and as a strategy to manipulate the reporting of working capital and cash reserves.

The full scope of the Review of Supply Chain Financing can be found here.

Small businesses and family enterprises who have had experience with supply chain financing can provide feedback via inquiries@asbfeo.gov.au

An interim report is expected to be released by the Ombudsman in March 2020, followed by a full report by the end of April 2020.