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Aussie Grocers Tapped To Fill SME Finance Gap

Could supermarkets be the solution to Australia’s small business financing gap? According to some policymakers, the answer is most certainly “yes.”

Businessman David Murray, who is heading the ongoing financial system inquiry, said that Australia’s two leading supermarket chains, Woolworths and Coles, could be the solution to rising demand for supply chain financing among SMEs.

“I don’t want to pick on the supermarkets, but if they have positive working capital, they collect before they pay,” he recently said in an interview with The Australian Financial Review. “Why couldn’t they use that cash to fund business?”

Woolworths and Coles already offer financial services, but because they get paid before they have to pay their suppliers, the companies could potentially use their positive cash flow to support small businesses.

According to reports, Murray highlighted Alibaba as a model for alternative banking in Australia, as well as other major conglomerates, like GE, that have normalized the concept of providing supply chain financing to their existing buyers and suppliers.

When asked about Murray’s proposals, Woolworths’ group head of financial services, Dhun Karai, said that the supermarket chain is focusing on payments and cards at the moment, adding that the company will remain dedicated to FinTech and payments. The former finance director for Coles, Rob Scott, similarly declined to comment on Murray’s specific proposals.

Reports noted that while there is a growing alternative lending market in Australia – OnDeck, for example, is exploring entry into the market, while domestic alt lender Moula has launched operations – these players are more inclined to partner with traditional banks to boost financing to SMEs, not with players like supermarkets.

Further, according to Murray, alternative financers are offering higher interest rates; he cited OnDeck’s rates of between 20 and 99 percent for its financing, for example.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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