Ombudsman heaps praise on Bundaberg billionaire
THE Australian Small Business and Family Enterprise Ombudsman has commended Bundaberg whiz Lex Greensill for following through on a promise not to provide late-paying businesses with supply chain finance.
Greensill announced the move on its website yesterday.
“Greensill helps suppliers get early access to the money they are owed – something that is more important than ever in the current climate,” the statement says.
“In February, we informed all of our Australian clients that we expected compliance with our public statement to not let clients use Greensill’s SCF to push out payment terms to SME suppliers beyond 30 days.
“We are proud to say that virtually all of Greensill’s clients in Australia are fully compliant with our statement for SCF facilities provided by Greensill.”
Ombudsman Kate Carnell said she welcomed Greensill’s announcement.
“We welcome Greensill’s public statement today, reiterating its position that it will not allow its supply chain finance facilities to be used by Australian clients which extend payment terms to SME suppliers beyond 30 days,” Ms Carnell says.
“Greensill has also confirmed it will discontinue the use of supply chain finance facilities who misuse its products by pushing out payment terms.
“It is clear from media reports this week, Greensill’s statement is in relation to its dealings with contractor UGL, owned by construction firm CIMIC.
“UGL has reportedly extended its payment terms to its small business suppliers to 65 days from the end of month the invoice is lodged, offering supply chain finance to those that want to be paid earlier and are willing to take a discount on the invoiced amount.
“This is an example of clear misuse of supply chain finance as outlined in our recently released Supply Chain Financing Review.
“Practices such as this are harmful to small businesses, especially in the current challenging environment.
Ms Carnell said that, as recommended in the final Supply Chain Financing Review report, federal legislation requiring small businesses to be paid in 30 days was the only way to drive meaningful cultural change in business payment performance across the economy.
“Last year the Prime Minister said the government would introduce a rule requiring businesses with commonwealth contracts to pay their suppliers within 20 days,” she said.
That’s certainly a step in the right direction and can’t happen soon enough.
“In the meantime, large businesses extending or in some cases suspending payments to small businesses are on notice that this behaviour is unacceptable and may rule them out of future federal government contracts.”
Greensill said it had allowed a period for remaining clients to complete internal reviews stemming from yesterday’s announcement.
“We have given formal notice to those clients that their SCF facilities will be discontinued unless they ensure that they do not use our SCF facilities to push out payment terms to SME suppliers beyond 30 days,” its statement said.
Financial whiz Mr Greensill and his company have made a wave of headlines over the past fortnight.
While most of the economy has slowed down, the opposite is true for supply chain finance, with business booming and Greensill making three new executive appointments.
And finance hasn’t been the only thing he’s supplying at the moment. In lockdown in Cheshire, Mr Greensill and his wife have been milling flour for locals as the only owners of a mill in their village. The couple also run the dairy stall at the local markets on Saturdays.