While debate rages about late payments affecting SMEs, one business owner suggests Australian businesses have it much easier than their global counterparts.
Andrew Lupton, co-owner of meat manufacturer Nonna’s Gourmet Sausages and Deli, tells My Business that Australian business are, in general, much better at paying their bills than their counterparts in many other countries.
“I worked in Spain for eight years before I came to Australia and payment was optional there,” recalls Andrew.
“We dealt with lots of the larger plastic processing companies and they would pay you from 120 to 180 days, and only then if you really started begging. And that was before the GFC hit!”
“There [are] stories coming out of Spain these last six years that even councils haven’t been paying their employees for up to six months.”
He adds: “All that payment thing in Spain was dreadful, but here in Australia, it’s good.”
However, this doesn’t mean chasing invoices and paying his own bills on time have been easy.
According to Andrew, paying your suppliers on time is not only important for maintaining strong relationships with those suppliers, but also safeguards yourself and your business from developing a bad reputation as a late payer.
“[For example, in] the meat industry, you have to pay seven to 14 days full stop. It’s a very immediate business,” Andrew says.
“There’s high cash flow ... small margins turned regularly, that’s the way it works.
“Seven to 14 days. They’re very strict, the meat people. They put you on credit hold. They don’t care who you are. That’s the way it is.”
Andrew explains that in any industry, particularly smaller or more close-knit ones, becoming known as a late payer can spell doom for your business in the long term, because it dilutes trust in you and your business.
“It doesn’t matter who it is. It’s all about payment patterns and as soon as the pattern’s broken, they need to have a good reason why it’s broken, and if it’s not a particularly believable or credible excuse, then you have to toughen up,” he says.
Given the fact that Andrew has lived and operated businesses in many different countries before coming to Australia, he also has a unique view on the Aussie way of doing business. Among his observations is this, “In this country, people don’t like being put on credit hold or they all take it so personally. That is often a relationship-breaker.”