Pauline Hanson wants to force big businesses to pay SMEs on time

One Nation leader Pauline Hanson wants to increase pressure on Australia’s major political parties to crack down on SME payment times, calling for laws forcing big businesses to cough up within a mandated timeframe.

Hanson says big businesses should be forced to pay invoices to small businesses “no later than 30 days from end of month, unless agreed at the outset of the contract”.

The position goes a step further than either the Coalition or Labor, which have recognised small business payment times as an issue but have thus far not committed to a mandatory scheme.

Hanson said SMEs are getting stuck with the cash flow consequences of big businesses delaying invoice payments for several months.

“Small and medium-sized businesses should not be used as a cheap source of finance through extended or late payment terms,” she said in a statement.

Under the policy, Hanson wants an avenue for compensation for small business owners who aren’t paid on time, including interest and other “reasonable costs”.

Interest would be set at “8% plus the base rate of interest set by the Reserve Bank of Australia”, which is currently 1.5%.

Hanson also said she will introduce legislation to force the top 100 listed ASX firms and multi-nationals to “disclose all of their payment times and practices and performance against those terms”.

However, this appears to be a scaled-down version of the Coalition’s commitment last November to force Australia’s 3,000 largest businesses to reveal how quickly they pay small businesses.

Hanson also wants to establish a “National Payment Transparency Register” which would rank the payment practices of all ABN-registered businesses.

However, the vast majority of businesses on such a register would be small businesses themselves, seemingly defeating the purpose of the policy.

Hanson did not provide costings for any aspect of the payment-time policy in her public release on Monday morning and declined to comment further.

The payments issue

Research on small business payment times conducted by Australian small business and family enterprise ombudsman (ASBFEO) Kate Carnell has found payment times to be a “huge issue” facing business owners.

Late last year, Carnell extended a review into payment times after an outpouring of responses from SMEs, with 500 received in four days.

A 2017 inquiry conducted by the ombudsman’s office found Australia was a global laggard on payment times, with invoices closed 26.4 days late on average.

Council of Small Businesses of Australia (COSBOA) chief executive Peter Strong says late payments are creating a crisis for small-business people across the country.

“They have wages to pay, rent, energy and GST/PAYG/company tax to pay to people who won’t accept late payments,” he tells SmartCompany.

“The behaviour of the biggest businesses who abuse their dominance and power has to be confronted,” he adds.

Response lacking

The government has committed to a 20-day-payment-time plan for small businesses it contracts, but Hanson believes more needs to be done to protect SMEs in the private sector.

The Business Council of Australia has a code of conduct committing signatories to pay small businesses within 30 days of an invoice being issued, but Carnell has previously criticised the scheme for not covering enough companies.

There are 47 BCA member signatories of the code out of the organisation’s 139 members, while 37 have signed on as non-BCA members.

Hanson says a mandatory scheme is the best way to address the issue.

“Voluntary codes of conduct relating to payment terms are no longer acceptable as Australian banks and credit services tighten their lending criteria,” she said.

Small Business Minister Michaelia Cash did not respond when asked whether the government would be open to a mandatory scheme on Monday morning.

Hanson only has two votes in the Senate but is well positioned to push a policy agenda when making deals with the major parties.

Small-business payment times will be a priority in forthcoming discussions with government and opposition frontbenchers, she said.

Hanson also wants small business workshops to be created to encourage the adoption of technology solutions for on-time payments, such as e-invoicing.

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