TRANSCRIPT
Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.
2CC Canberra
Subject: Release of the ASBFEO Small Business Guide to dealing with debt/ASBFEO Review.
Leon Delaney
The Australian Small Business and Family Enterprise Ombudsman has released a guide designed to help small businesses managing the difficult and sometimes tedious challenges of dealing with debt. Whether you owe, or somebody owes you, it can be an obstacle when running your own business. The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, good afternoon.
Bruce Billson
Leon, great to be with you and your listeners.
Leon Delaney
Well, thanks for joining us today. So, what have you got to help people out that are struggling with balancing the books?
Bruce Billson
There's some simple tips where really staying on top of money that’s owed to you or by you.
What we've noticed is a distinct uptick in the number of requests for assistance to my agency by people either owed money, and that's the largest category of concern that we've got coming through the office here, but also a big uptick in the number worried that the people that owe them money may well be insolvent and that one business' problems might represent a contagion to another.
So we’ve put some ideas forward about how to stay on the right side of debt and keep cash in the business. It's the oxygen of enterprise, and you need to make sure it's there to keep your business ticking over.
Leon Delaney
That's right, if there's one business that struggles to pay its debts, then the business that’s waiting to be paid, also has bills to pay themselves, don't they?
Bruce Billson
That's right. That's what we see is this contagion effect that is quite concerning and increasingly being raised with people that contact our office. They are noticing a delay in payments, we've talked before about how too many large businesses are very slow paying their small and family business suppliers, and that that represents a real challenge for the small business.
But this is something new, where we've always seen quite a high proportion, about 40%, of the matters that come my agency where businesses are looking for help, involve payments. Just getting paid for their work that's been already done or delivered, but there's this increasing background worry that hey, this business I'm dealing with hasn't paid me, I wonder if they've hit troubled waters themselves and I might end up getting in trouble because of that myself.
Leon Delaney
What about governments? Are they getting better at paying their bills on time?
Bruce Billson
Yes, they are, there's a number of very express commitments that governments have made and there is scope for small and family business suppliers to go back to government saying you haven't met those undertakings and you can actually ask for some penalty interest. Even in the areas where there's a major government contract, one of the things that can be part of that contract, is for the business that wins that work to make sure they are paying their suppliers in a timely way.
So, some of that institutional arrangement where governments involved is working for more timely payments. That doesn't reach though into private sector work and it particularly doesn't reach into areas where that payment worry might actually come after you - the business that's done the work. You have already spent a chunk of money meeting the requirements of that work. So not only are you're not getting paid your margin and hopefully some reward, you are actually out-of-pocket yourself and you're waiting for the payment to come in to cover that as well. So that's where there's an emerging area of concern.
Leon Delaney
Okay, what's your number one piece of advice for businesses that are desperately waiting for a payment to come in and it's just not arriving?
Bruce Billson
I think be proactive, get on the front foot. I certainly remind people, and this is something we find, most of the people that come to us looking for help just need some tips on what to do next.
So, on our website there is some guidance available. It's about making it clear that the money's outstanding. It may even be an escalation point where you've putting in train some legal action or even a very formal notice that payment is overdue and there's a high expectation it be settled quickly, so to avoid further legal action. So, it about being on the front foot.
If you owe money, it's about meeting whatever payments you can meet, even if you're not fully placed to satisfy the full amount. Show your goodwill by meeting what you can meet and that you're ready and able to make the balance of the payment when you're in a position to do so.
Leon Delaney
Well you have clearly pre-empted my obvious follow up question there, which was going to be, what do you do if you're the one that's struggling to make the payment? Do you just keep quiet and hope it goes away?
Bruce Billson
No, our advice is to get on the front foot. What we’ve noticed Leon, is so often in these matters where a payment dispute arises, it's between businesses that hope to keep doing business with each other.
So it's a matter of getting past that hiccup and these are mostly reasonable people. They will understand if something unforeseen has impacted on your capacity to pay, but have that conversation, communication is very important.
Proactivity, very important, but also doing the right thing as best as you can. Clearly that’s ideally meeting those payments in a timely way because good business pays. But if you're not in a position to do that, do what you can and show your goodwill and then engage in a conversation so everyone's aware of what's going on and hopefully keep that business relationship intact.
Leon Delaney
Okay so all of this good advice can be found in your better help guide small business debt. Where can people find that if that, you know if they've got 5 minutes in their busy day to read through it?
Bruce Billson
Jump on the nation's most compelling website Leon – www.asbfeo.gov.au and for us the w’s aren’t just worldwide web, it’s website worth watching, for small and family businesses wanting tips and useful info, it's a gripping site to visit.
Leon Delaney
I'm sure it is. Now a question without notice, I saw something reported last week that the Federal Government is going to instigate a review of your office, now is this new normal regulatory oversight or are they out to get you?
Bruce Billson
No, it's not the latter, when the agency was established one of the things that was central to it, is our dispute resolution function to help businesses sort out their problems without having to go to court.
The legislation that I operate under says every four years, we’ll check out whether that toolkit adequate, and we can efficiently and effectively support the small businesses looking for help, and that's what the four yearly reviews about. Rather than just look at our assistance function, it's been the habit to look at the whole operation.
So hopefully, people will think we're doing worthwhile things and championing the cause of small and family businesses who are so busy just trying to make it work at the moment. That's what the review is about. We welcome it and we'll engage constructively.
Leon Delaney
Marvellous, thanks very much for chatting today.
Bruce Billson
Fab to be with you and your listeners, take care.
Leon Delaney
Thank you.
Bruce Billson the Australian Small Business and Family Enterprise Ombudsman.