After pledging to stop providing its supply chain finance services to big companies that do not offer fair payment terms, Greensill has taken another leap forward, issuing discontinuance notices to its clients who fail to comply with 30-day payment terms.
“This is strong action taken in response to our Supply Chain Finance Review, showing that Greensill takes prompt payment times to small business seriously,” the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, said.
“There is no reason why other supply chain finance providers can’t do the same.”
Earlier this year, Greensill came forward and announced it won’t be used as a whipping boy for the bullying of small business by their larger peers.
Greensill operates a reverse factoring process, whereby it acquires invoices from the suppliers of its customers for a fee and packages them into short-dated bonds that are sold to investors.
The company has now been praised by the ASBFEO on several occasions, as the ombudsman continues her efforts to encourage 30-day payment terms.
“As outlined in our Supply Chain Finance Review, we know there are large companies extending their payment terms to 60 or more days from the end of month the invoice is lodged and offering supply chain finance to those that want to be paid earlier and are willing to take a discount on the invoiced amount,” Ms Carnell said.
“This practice is unacceptable and harmful to small businesses, especially in the current difficult trading conditions.
“Now, more than ever before, small businesses need to be paid the full invoiced amount owed, on time. Their survival depends on it.”
Her office has been lobbying government to enact federal legislation requiring small businesses to be paid in 30 days, noting that this is the “only way” to drive meaningful change in business payment performance across the economy.
“Greensill has shown that supply chain finance providers can lead by example by cutting off clients that fail to pay on time.
“This should be the position adopted by all supply chain finance facilitators.”