B2B Payments

Australia Enters The SME Late Payments Battle

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U.K. lawmakers have become some of the most active in working to combat late B2B payments, while the U.S. is also beginning to ramp up efforts against the practice, which squeezes the cash flow of small suppliers.

Now, Australia is the latest market to take aim at late SME payments. Australian Small Business and Family Enterprise Ombudsman Kate Carnell has spoken out against corporations paying their suppliers on longer payment terms.

According to Michael West, an independent Australian journalist, policymakers' eyebrows are raising at an emerging practice within the supermarket industry. Coles and Woolworths have both reportedly confirmed that they implemented "pay-on-scan" payment terms with their suppliers, which sees their vendors not getting paid until their products are actually scanned through checkout.

"It gives supermarkets a chance to extend their payment terms," West said in an interview with ABC Rural. "This is the whole game in procurement. If businesses can pay a bit later, say two weeks, it's another two weeks the cash can sit in the company treasury."

Kellogg's and dairy supplier Fonterra have said their payment terms with their corporate buyers have been lengthened to 120 days.

Ombudsman Carnell agrees that payments to small suppliers must not be delayed so much.

"Payment times and terms are at the top of the agenda of issues small businesses want us to raise with the government," she stated, according to reports. "We are looking at having an inquiry into this and looking at what the options are in Australia."

"We must make a move on this," she continued. "Larger businesses are happy to use small businesses as their de facto banks, while 90 percent of small businesses go broke due to cash flow problems."

West told reporters that Australia may want to consider implementing rules that have emerged in the European Union that require 30-day payments to small suppliers. Some suppliers across Europe, however, say those rules have been ignored.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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