B2B Payments

Australia Tells Wine Sector To Kick Its Late Payments Habit

The Australia Competition and Consumer Commission (ACCC) is ramping up its efforts to promote faster payments to small suppliers in the wine industry, according to The Sydney Morning Herald.

The publication reported Monday (July 22) that the ACCC has renewed calls for major winemakers to accelerate their payments to small grape suppliers following the release of an ACCC report highlighting the watchdog’s concerns over payment practices in the sector.

ACCC Deputy Chairman Mick Keogh spoke at the Australian Wine Industry Technical Conference on Monday to reiterate the importance of prompt vendor payment. Speaking to members of the audience who believe extending payment terms to vendors is a reasonable strategy, Keogh placed the conundrum in another context.

“As a wine consumer, I think I should be able to select a bottle of wine off the shelf, and decide what it’s worth. I pay one-third of that when I leave the store,” he said. “I’ll pay a second one-third payment in six months, and I’ll pay the balance when I get around to drinking it, which could be years in the future.

“If you think this is a ridiculous proposal, then perhaps you need to reflect that this is essentially how the current contract and payment terms operate for wine grape growers,” he said.

The ACCC is urging the wine sector to phase out its practice of longer payment terms and encouraging 30-day payment agreements for winemakers above a 10,000-ton processing capacity threshold.

The ACCC published an industry report on supplier payment practices last month, concluding that suppliers must sometimes accept “potentially unfair and uncertain” payment terms with their winemaking customers. The report also highlighted the “imbalances in supply agreements” and the trend of small grape growers to absorb a disproportionate amount of risk with their winemaker customers.

Payment terms can be as long as nine months, the report found.

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