“Unacceptable”: Carnell slams late payments by owner of Peter Alexander, Just Jeans to small suppliers

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Small business ombudsman Kate Carnell.

Australian small business ombudsman Kate Carnell has called out a growing number of big businesses for continuing to delay paying their smaller suppliers, including retail group Premier Investments, which last week declared close to $138 million in profit for the 2019–2020 financial year.

The company, which owns Peter Alexander, Smiggle, Just Jeans, Portmans and Jay Jays, is one of several companies that Carnell has accused of delaying payments to their suppliers, along with Myer, David Jones, the Sussan Group and CIMIC.

According to reports, Premier Investments sought “support from suppliers for temporary flexibility in payment terms” when coronavirus restrictions were first put in place, but chief executive Mark McInnes said last week supplier payments have now returned to their previous arrangements as the group’s stores outside of Victoria have reopened.

Speaking to SmartCompany, Carnell says while late payments to suppliers is an ongoing issue, she is particularly worried about large companies that continue to do so while publicising their own profits.

“Pushing the problem down the supply chain is never going to be acceptable,” she says.

“The more we can call them out, the better.”

As reported in SmartCompany earlier this year, the since passed Payment Times Reporting Bill 2020 is set to establish a Payment Times Reporting Scheme, which “requires businesses and government enterprises with an annual total income of over $100 million to biannually report on their payment terms and practices for their small business suppliers”.

However, the scheme falls short of imposing financial penalties for big businesses doing the wrong thing, which is something the Labor opposition has called for.

Carnell says simply disclosing late payments is not enough.

“Reporting is one thing but requiring payment times within 30 days or less is what needs to happen,” she explains.

“[Large companies] are happy to report slow payment times. The reporting framework has passed but it won’t make any difference to their behaviour.”

Speaking to SmartCompany, CreditorWatch CEO Patrick Coghlan says small businesses were already “struggling with collections and payments pre-COVID.”

“[Small businesses] are averaging over 40 days overdue at the moment… small businesses often get treated poorly when it comes to getting paid on time,” he says. 

Coghlan also said in a statement that credit enquiries increased by 7.5% from July to August 2020: “It’s the fourth consecutive month this year [that] enquiries have risen and are at pre-COVID levels.”

Carnell went further in AFR to say that companies with an increase in cashflow that continued to delay payments to suppliers are “unethical”.

“It’s unacceptable for big entities like Premier to utilise late payments as a method of making their figures look better,” she said in a statement.

NOW READ: ‘An act of business bastardry’: Big business keeps squeezing small suppliers on payments in face of COVID-19

NOW READ: Will naming and shaming work? Small business sceptical as Payment Times Reporting Framework scrutinised in senate

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