The retailer has announced that from July 1, it will reduce payment times to within 14 days for businesses with a turnover of up to $1 million.
Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell says Coles is leading by example and encourages other big businesses to do the same.
“I congratulate Coles’ management for their leadership on this issue, and call on other big businesses to follow Coles’ lead and reduce their own payment times to small business suppliers,” she said.
The ASBFEO is currently carrying out an inquiry into payment times and practices in Australia, with preliminary findings indicating small businesses have little – if any – power to influence payment terms in their agreements with larger companies.
“The inquiry has found that payment times have got worse in the past 12 months, with large multinational companies being the worst offenders,” Ms Carnell said. “In fact, some large companies have moved payment terms to as long as 120 days.
“72 per cent of small businesses say they simply have to grin and bear it when supplying goods and services to a large corporation, which is why Coles’ decision to reduce their payment times is so significant.”
The ASBFEO has consulted widely with industry groups, as well as businesses large and small, to determine the extent of the problem, and the possible solutions to correct the imbalance that exists in this space between big and small operators. Its final report will come out within weeks.