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RIO ACTS BUT GOVERNMENT ABSENT ON SMALL BUSINESS PAYMENT TIMES

February 05, 2020

Federal Labor welcomes Rio Tinto’s decision to reduce its payment times to 20-days for suppliers with annual turnover of up to $10 million annually.
 
Meanwhile the Government, who committed to ensuring big business can only get government work if they pay small businesses on time, have failed to deliver and can’t ensure businesses this policy will be up and running before the next election.
 
Rio Tinto’s decision follows a similar decision by Telstra this morning and  pressure from Labor about unreasonable payment times. It is unacceptable for any company to not pay suppliers in 30 days or less.

While two major companies in Australia have acted swiftly, where is the Federal Government’s plan?
 
It has been 18 months since Scott Morrison and Michaelia Cash, with great fanfare, announced they would require big business to have a 20-day payment time to small business in order to get government contracts, and yet nothing is up and running. 

The Government continues to try and spin its way out of its incompetence, with leaked talking points claiming they have a plan to ensure small businesses are “getting paid on time.”

Rio’s announcement follows reports it has also abandoned its use of  “reverse factoring” – a form of supply chain financing where small businesses pay a fee to be paid on time. 

This supply chain financing practice is unconscionable, but merely the tip of the ice-berg as these dodgy payment plans are risky and contribute to the economic woes we face. 

It is telling that at no stage has Senator Cash ever condemned or committed to action on reverse factoring.
 
Small businesses require prompt payments to help manage cash flow and to grow, particularly when access to finance is tight. The economy does not benefit from this type of financialisation that only benefits needless intermediaries.

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