THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell said fresh data reveals small and medium sized businesses are waiting far too long to get paid.

A survey of 1200 SME owners across the nation, conducted by East and Partners on behalf of Scottish Pacific, has found SMEs are waiting an average of 56 days to be paid.

“The smaller the business, the harder they are hit by late payment times,” Ms Carnell said.

“While businesses with $10-$20 million revenue wait an average of 40 days to get paid, smaller businesses with $1-$10 million revenue are waiting an average of 66 days.

“The research shows that at any given time, SMEs have a third of their revenue tied up in outstanding invoices. That’s money they could be spending on growing their business.

“The bottom line is that all businesses should be paid within 30 days," she said.

“Over the past few weeks we have seen both Telstra and Rio move to 20-day payment terms for their small business suppliers and there is no reason why other big businesses can’t do the same.

“Our Supply Chain Financing Review has revealed the voluntary Supplier Payment Code is just not working.

“Formal recommendations will be made in the final report to be handed down in the coming weeks," Ms Carnell said.

“In the meantime, the Federal Government is consulting on its draft Payment Times Reporting Framework legislation that will require big businesses to be more transparent about their payment times.

“Businesses and interested parties have been given the opportunity to provide their feedback on this proposed reform which is designed to drive cultural change in business payment performance in Australia.”

www.asbfeo.gov.au

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AUSTRALIA's largest accounting body, CPA Australia has released tips for small businesses facing the possibility of significant disruption from the likely spread of coronavirus or COVID-19.

CPA Australia spokesperson Paul Drum said COVID-19 will be a shock to many businesses that could place their immediate future in serious jeopardy, and there is no way of knowing how long this pending crisis will last.

“For many businesses, likely moves by governments to contain the public health risk may result in a sudden fall in demand for products and services, labour shortages and supply disruptions," Mr Drum said.

“Businesses must assume that health authorities will ask people to stay home to contain the spread of COVID-19, or that large numbers of people will voluntarily stay home. This will result in people consuming less and purchasing in different ways. It will also impact staff availability, especially for businesses where employees cannot work from home.

“As part of a comprehensive risk management strategy there are a range of actions small businesses should consider taking now to prepare them for COVID-19, to place them in the best possible position to navigate through the crisis and prepare to take advantage of the recovery,” Mr Drum said.

Small businesses should consider the following advice:

• Keep up to date with official information on COVID-19 and any directions public health authorities may issue
• Update your financial statements
• List possible impacts on your business of COVID-19, estimate the financial impact and develop mitigation strategies
• Perform a financial health check on your business
• Re-do your budgets with new assumptions
• Act now to improve cash flow
• Increase online sales
• Put in place a contingency plan
• Talk to key suppliers
• Identify employees with critical skills for your business and make sure they can continue working or can be replaced
• Do a reality check on your business
• If you find yourself in financial difficulty, seek professional advice early.

The full list of CPA Australia’s tips, including additional detailed information can be found here:

https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/training/detailed-tips-for-small-business-on-covid-19.pdf

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REDUCING workforce disincentives facing professional, university educated women could add up to 12 million working hours to the economy annually -- the equivalent of an extra 6,500 highly talented women in the Australian workforce.

A report prepared by the Australian Institute of Project Management (AIPM), to coincide with International Women’s Day, identified eight imperatives for improving gender equity in senior industry levels.

It found that reforming federal government childcare policy would encourage many female executives to stay in the workforce full-time after starting a family – boosting gender equity and the GDP.

The reform is crucial, said  AIPM CEO Elizabeth Foley, because six in 10 Australians still work in industries that are dominated by one gender.

“AIPM’s membership comes predominantly from project-based organisations in male dominated industry groups, such as mining, construction, manufacturing, information, media and technical services,” she said..

“Women represent just 22 percent of our members. This reflects the male dominance of project management-based industries, and doesn’t reflect the available female skills and talent out there.”

Ms Foley said childcare reforms introduced in 2018 by the Federal Government presented significant disincentives to women from professional backgrounds returning to work after having children.

“Under the current settings, if combined family income exceeds the set upper limits by just one dollar, the amount provided by the Child Care Subsidy Scheme plunges by at least half and in some circumstances by more than half,” she said.

“These built-in financial cliffs really exacerbate the work disincentives facing younger working mothers, dissuading them from working more than three days a week.

“And that’s a real pity, because it’s only by working full time that they can properly achieve career mastery.”

The AIPM’s report identifies changes required to bring gender equity to the workplace.

As well as childcare reform, they include building a work culture that values women, closing gender-defined gaps in pay and superannuation, and breaking down the gender dominance (both male and female) that characterise many industries.

“In Australia, only 25 percent of the ASX-listed executive leadership team are women,” Ms Foley said.

“At that level, the gender pay gap averages 21.3 percent – meaning women are being paid almost $26,000 less each year than men filling identical roles and carrying identical responsibilities.”

https://www.aipm.com.au/resources/reports/gender-equity-in-the-workplace

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WITH INSOLVENCIES at an all-time high, and the continued risk of constructing high-rise unit blocks, it is essential developers focus on the ‘missing’ middle ring, employ a sustainable business model and address imbalances in the property market, according to RiskWise Property Research CEO Doron Peleg.

This has never been more important, he said, as figures show building approvals, especially in Sydney, are on the increase.

According to the latest figures from the HIA, building approvals in November reached their highest level since March 2019, up by 11.8 percent due, predominantly, to a surge in NSW.

Figures show, in seasonally adjusted terms, building approvals for the month of November 2019 increased in NSW (+52.8 per cent), South Australia (+3.8 per cent) and Queensland (+1.0 per cent).

However, RiskWise’s Mr Peleg said an increase in approvals did not necessary bode well for the property market as indicated by the record number of developer insolvencies.

ASIC reports the number of construction businesses that went into external administration rose from 371 in the September quarter of 2018 to 514 in 2019. Meanwhile, over the 2018-19 financial year, 556 construction companies went under, 101 more than the previous financial year.

In addition, 169 NSW-based construction companies went into administration, receivership or a court-ordered shutdown in the June quarter which was the highest number since the September quarter in 2015.

According to CreditorWatch, the construction sector also topped the list for recovery court actions Australia-wide and in NSW, court actions for recovery in the third quarter of 2019 were 35 percent higher than the comparable quarter of 2018.

Mr Peleg said there had already been numerous cases of lots approved for development and subsequently sold at a loss, especially in light of the construction defect reports.

“And if you are losing 20 percent, you are lucky. We are really talking about millions of dollars,” he said.

“The point is developers are at risk of insolvencies and this means they need to mitigate this risk by ensuring they have a sustainable business model, focus on the ‘missing’ middle ring and address imbalances in the property market.

“Focusing on the missing middle is by far more of a solution than taking the risk of off-the-plan high-rise development.”

Mr Peleg said population growth, job creation, improving economies and good infrastructure that Sydney and Melbourne were experiencing would draw people to these cities and, therefore, increase demand for property, with population forecasters expecting both to hit the eight million mark by 2050.

In addition, he said in the current environment of already high prices it would be more difficult for owner-occupiers to compete with property investors, especially given the current environment of low interest rates and low out-of-pocket expenses. 

“We expect to see investors increase their activity in the market as it is currently well below peak and this will put further pressure on dwelling prices and housing affordability,” he said.

“But it must be remembered that family suitable units in the middle rings are more attractive to owner-occupiers looking for larger floor space, lower price per square metre and smaller unit blocks. These are, effectively an alternative dwelling to houses, which are, in many areas, unaffordable.

“These imbalances in the market cannot be resolved without a strategic solution and co-ordinated plan by all levels of government.

“In the meantime, what it means for developers is they should be focused on developing the middle rings with family-suitable accommodation close to transport hubs and schools. There are actually many areas that have a great potential and carry a low risk, it is only a matter of business strategy and proper risk management practices.”

www.riskwiseproperty.com.au