ScotPac backs calls for big business to accelerate SME payment times

ScotPac, Australia and New Zealand’s largest non-bank business lender, has backed calls by Bruce Billson, the Australian Small Business and Family Enterprise Ombudsman, for big businesses to ‘lift their game’ on ‘woeful’ payment times to SMEs.

Billson was commenting on new data from the Payment Times Reporting Regulator that found nearly a quarter of big businesses take more than 120 days to pay their small business customers, and just 30% pay SME customers within 30 days.

The data looked at the payment performance of more than 7000 big businesses, many with a turnover of more than $100 million. The worse performing sectors included manufacturing, construction and retail trade.

ScotPac CEO Jon Sutton (pictured) said big businesses were not only hurting SMEs through unreasonable payment delays, but also their own customers.

“SMEs employ around five million people in Australia,’ Sutton said. ‘Because we live in a circular economy, slow payments to SMEs affect the capacity of up to 20 per cent of our population to buy goods and services from big businesses, so there are no winners.’

“Cashflow challenges for SMEs have increased in the past 12 months following the withdrawal of COVID support measures and the recommencement of collection activity by the Australian Tax Office.

“ScotPac’s most recent SME Growth Index report found a quarter of Australian SMEs added non-bank funding facilities last year. For ScotPac, that translated into a 30 per cent year-on-year rise in invoices funded.

“Invoice finance is a powerful tool that gives SMEs the ability to instantly unlock working capital tied up in their unpaid invoices.

“Many of our customers use invoice finance to accelerate growth through acquisitions and asset purchases. Others use it primarily as a cash flow management tool.

“However, the whole system is reliant on big business debtors paying SMEs within the terms of their agreement, so we back the review of big business payment times to SMEs and look forward to recommendations to improve current practices,” Sutton said.

A Federal Government review into the Payment Times Reporting Act was announced last year, looking at ways to improve payment times and terms for small businesses.

SMEs can have their say on the consultation paper here – submissions close 1 March 2023.