By Emma Koehn April 8, 2019
A number of Australia's best known companies including Wesfarmers and David Jones are refusing to publicly confirm to the small business ombudsman how long they take to pay suppliers, with some saying it could harm their competitive advantage.
Small Business and Family Enterprise Ombudsman Kate Carnell said the excuses by companies for not wanting to have their supplier terms published have verged on "spurious" and the reluctance was a "significant concern".
Payment terms and late payments have been in the spotlight over the past 12 months after a number of inquiries revealed smaller operators were facing cash-flow problems as a result of larger companies paying late or having standard terms of up to 90 days before they paid invoices.
In a report published on Monday advising small business minister Michaelia Cash, Ms Carnell's office outlined the results of its research after questioning big businesses and small suppliers.
It asked more than 100 companies to confirm the standard period of time it takes them to pay. More than 2000 businesses were also surveyed about their experiences getting paid.
Amcor, Baby Bunting, Bunnings Group, David Jones, Slater & Gordon, a2 Milk, Vodafone and Wesfarmers said they "did not wish" to place their payment times on the record.
Many companies argued that revealing this publicly would impact their competitive position, Ms Carnell said, but she discredited this notion.
"It’s a tiny, weeny bit difficult to think this could impact upon competitive position — unless it was about those companies being shown up to be less good payers than their competitors," she said.
David Jones confirmed it made the decision because payment terms contain "commercially sensitive information".
Vodafone confirmed it had told the ombudsman about its payment terms as part of the research but the figures the office proposed for publication did not "accurately represent the payment terms agreed to by the majority of our suppliers", it said.
Wesfarmers said while within its corporate office, two-thirds of invoices are cleared within 14 days, it did not want to publish one figure as a standard jumping off point given it has "four autonomous divisions and many different businesses".
"It would not have been clear what was being referred to from a single figure for Wesfarmers Limited in this report," a spokesperson said.
Slater & Gordon and a2 Milk declined to comment on why they had made the decision. The other businesses have been contacted for comment.
However, companies may soon be compelled to outline their payment terms, whether they want to or not.
The government has committed to working on a national payment times register that would compel businesses with turnover of $100 million or more to explain how long it takes to pay smaller suppliers.
Small businesses still struggling with late payers
The vast majority of businesses surveyed confirmed they pay suppliers within 30 days of an invoice being issued. Sixteen companies told the ombudsman their terms were 60 days.
More than one in 10 big businesses take 60 days or more to pay their suppliers as standard.
One in five of the small businesses surveyed said more than 40 per cent of their invoices were paid late last financial year, regardless of the standard payment terms of the larger company they were working with.
The report makes seven recommendations for improving the late payments problem. This includes working with the consumer watchdog to consider whether supplier terms, like very long payment windows, could be brought under the umbrella of unfair contracts law.
The ombudsman's office has also put its hand up to help oversee annual reporting of payments.
Emma is the small business reporter for The Age and Sydney Morning Herald based in Melbourne.