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Greensill stays true to his word to ditch late payers: Ombudsman
THE Australian Small Business and Family Enterprise Ombudsman, Kate Carnell has commended Lex Greensill for following through on his promise not to provide supply chain finance to late paying businesses.
“We welcome Greensill’s public statement today, reiterating its position that it will not allow its supply chain finance facilities to be used by Australian clients which extend payment terms to SME suppliers beyond 30 days,” Ms Carnell said.
“Greensill has also confirmed it will discontinue the use of supply chain finance facilities who misuse its products by pushing out payment terms.
“It is clear from media reports this week, Greensill’s statement is in relation to its dealings with contractor UGL, owned by construction firm CIMIC.
“UGL has reportedly extended its payment terms to its small business suppliers to 65 days from the end of month the invoice is lodged, offering supply chain finance to those that want to be paid earlier and are willing to take a discount on the invoiced amount," Ms Carnell said.
“This is an example of clear misuse of supply chain finance as outlined in our recently released Supply Chain Financing Review. Practices such as this are harmful to small businesses, especially in the current challenging environment.
“As recommended in our final report on our Supply Chain Financing Review, federal legislation requiring small businesses to be paid in 30 days is the only way to drive meaningful cultural change in business payment performance across the economy," she said.
“Last year the Prime Minister said the government would introduce a rule requiring businesses with commonwealth contracts to pay their suppliers within 20 days. That’s certainly a step in the right direction and can’t happen soon enough.
“In the meantime, large businesses extending or in some cases suspending payments to small businesses are on notice that this behaviour is unacceptable and may rule them out of future federal government contracts.”
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