Federal Labor calls for government small business support over increasing reverse factoring

The federal opposition has questioned the Morrison government’s support of small businesses, following concerns over a payment process that is harming businessesby receiving delayed payments.

Labor has raised concerns about “reverse factoring” following reports of the process increasing on Thursday, and government promises over a register of payment times that had not materialised.

The party was concerned about large businesses extending payment times to small business suppliers after invoicing.

They are particularly wary about payment times extending and small businesses offered a third party financier to pay the invoice on time but with a fee, resulting in small businesses not receiving full reimbursement.

The opposition said Prime Minister Scott Morrison had promised last year to create a register of payment times of Australia’s 3,000 largest companies but still had not done so.

Labor said the government needed to ensure that small businesses were not taken advantage of.

“The Government has been missing in action when it comes to putting small businesses first,” it said in a statement.

“Small businesses require prompt payments to help manage cash flow and to grow, particularly when access to finance is tight.”

“If the Government does eventually come around to announcing the payment times register, they must ensure it does not let big businesses mispresent their payment times by using reverse factoring arrangements.”

Last week, The Australian Competition and Consumer Commission (ACCC) and ASIC has confirmed it will investigate delayed payment times and reverse factoring, prompted by Labor.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell said in the March Payment Term review that third-party financing must not replace reasonable payment terms.

“It is not acceptable for large businesses to use small businesses to optimise their cash flow,” she said.

Labor said the government had “no excuse” for not listening to small business concerns about cash flow problems.

“It is increasingly clear that the Liberals take small business for granted, setting the conditions that allow big businesses to treat small businesses like piggy banks,” it said.

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