26 Apr 2017

We will pay. Eventually

By Julius Grafton

I’m continuing on from last months ‘Magnificent – Unconscionable Behavior’ riff, which centered on the lowly paid and vulnerable in society. Remember the magnificent example of the Radio Rentals ‘Rent, Try, Buy for $1’ promotion? Where the poor buggers eventually paid $2004 out of their pensions for a washing machine worth about $550?

Now we lift the scope to businesses worth many millions, employing many people. They are helmed by astute and seasoned managers who know the lay of the land. Many of their upper echelon enjoy packages we can only dream of – you know, 800 grand a year for the top dog.


800 grand is about 16k a week, and after tax that is a nifty ten grand. Imagine getting ten grand in your account every Wednesday? WOW!

Turns out some of these SME’s (Small Medium Enterprises) are being rogered by Very Big Corporations who dictate How They Will Pay. Nothing new in this, ask any supplier about how they get their dosh and you’ll get the same (usually) story about how Government Departments and Big Corporates usually drag the chain.

Thankfully some of them are now offering suppliers access to a bank loan – to bridge the gap between invoicing the multinational, and getting paid. This is to ease the pain from the 120 day settlement period. You read that right – firms like Mars, the people who make The Bar. You know the one….

This is the text of their weasel worded release:

“Mars is committed to manufacturing in Australia across our seven sites in NSW, Victoria and Queensland, providing great jobs in regional areas and sourcing produce from local suppliers. While Australia presents a challenging economic climate for manufacturers, we continue to invest heavily in state-of-the-art equipment, processes and infra—“ (yada yada yada).

Here it comes:

“In order to remain competitive and secure future growth for our business and for our suppliers’ businesses, we are working individually with them to seek an extension of payment terms while providing them with access to a third-party financing program. Through this program, suppliers can obtain payment for their invoices, typically within 12 days, on very favorable finance rates based on Mars’ credit rating. This improves cash flow for our suppliers and therefore gives them greater financial security….” (Much more yada).

Yep you got it, they will only pay suppliers after 120 days and hook the lucky suppliers up to THEIR bank for a loan to cover it. Magnificent! Brilliant too, ‘cos if you are shipping container loads of whatever muck goes into their sticky chocolate bars, you are completely at their mercy and far less likely to take a better offer from Cadbury!

Turns out a bunch of multinationals are testing their suppliers with things like a ‘formal’ terms ‘agreement’, while some Government departments are routinely taking 90 days or more to cough up tax payer money to tax paying suppliers.

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) don’t think it’s so flash, they unearthed this and many more acts of *chicanery from a slew of submissions and over 2,700 survey responses to their Payment Times and Practices Inquiry. We’re starting to like this ASBFEO mob!

* (Big word alert. It means: “the use of deception or subterfuge to achieve one’s purpose.”)






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