Chevron’s system urges suppliers to discount their invoices in exchange for early payment. Amid the current global coronavirus pandemic, those suppliers are already facing a squeeze on their budgets. And Chevron hasn’t paid income tax in Australia for years and is planning to move into an expensive high-rise office in Perth-based Elizabeth Quay.
Matt Keogh, spokesman for West Australian Resources’ Federal Labor, said the scheme was predatory toward smaller businesses. In the current global environment, many companies are not certain of their financial futures as the coronavirus pandemic wreaks havoc on the economy and slows down all types of business.
Keogh said the behavior from Chevron was “even more unacceptable” in these conditions. He said now is the time to stick up for smaller businesses rather than loading more burden onto them. Keogh said the energy company should instead pay its companies promptly with no shady business.
Australian Prime Minister Scott Morrison recently also said big businesses should take on the burdens of those who can’t afford to by fast tracking payments and making sure everyone has what they need. He called it “patriotism” to do so.
Other companies, like Rio Tinto and Telstra, have peddled similar schemes, and an investigation by The Australian revealed both had partnered with Delaware-based Taulia, which uses data to calculate how much a supplier could stand to lose.
The publication said such schemes have multiple names, such as reverse factoring or supply chain financing, but all of them have the basic effect of asking small businesses to take a cut in revenue if they want to be paid in a timely manner.
Chevron has partnered with U.S. firm C2FO and sent emails to suppliers several times this week about the payment idea. Small Business Ombudsman Kate Carnell, reviewing the general practice of early payment schemes, said that while the idea isn’t necessarily shady, its implementation often ends up being harmful to smaller entities.
The coronavirus outbreak has seen a number of instances of sellers and businesses price-gouging and otherwise acting in ways that could be considered unsavory.