By Lex Greensill
Founder and Chief Executive Officer
The debate about making finance fairer for small businesses in Australia is long overdue.
Supply chain finance (SCF) has been front and centre of this much needed discussion as it has become an increasingly popular means for businesses of all sizes and shapes to manage payments.
How to pay small suppliers fairly has also been the focus of a review by the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, amid concerns that SCF is being abused by some big businesses to impose onerous payment terms on their small business suppliers.
When I was growing up on my Mum and Dad’s farm in Bundaberg we knew only too well what it was like waiting for big retailers and wholesalers to pay for the crops we had grown. It was hard. My brothers and I sold melons by the side of the road to help ends meet. That’s what you do on a family farm, or in any small business. You all pull together to make it work.
It is on this principle, and on this experience, that we created Greensill and developed the technology that will ensure all small businesses wherever they are and whatever they do get paid what they are owed when they are owed it.
I for one welcome Kate’s Carnell’s important work. Exposing, and in turn stamping out, the misuse of what we at Greensill know to be a revolutionary means of making sure all businesses have access to the cash they need when they need it, is the highest priority.
We want to dispel any misunderstanding about the real benefits supply chain finance can provide when it is delivered properly, especially to small businesses.
As the ombudsman recently wrote: “SCF is a legitimate and effective tool to free-up cash flow for small and family business….We have spoken to small businesses that have used SCF to great effect to reinvest in their business and scale rapidly……offering optional SCF products can provide significant benefits.
Greensill’s position on payment terms for small businesses is clear: We will not let our SCF clients push out payment terms to SME suppliers beyond 30 days. If they want to do that, we will not do business with them.
Faster and more flexible payments liberate capital in the economy. As the ASBFEO reported recently, late payments by large business to small business account for 53 per cent of invoices. That is $115 billion worth of late payments to small business and it stops $7 billion of working capital being available to small businesses every year.
Tony Hilton and the team at Sydney’s Construction Claims Consultants, is just one of the many SMEs Greensill has helped.
“I can always pay my quarterly Business Activity Statement (BAS) on time,” Hilton said, “because the stream of revenue coming into the business is more consistent and predictable.”
Beyond better payment terms, Greensill has also enabled CCC to foster better relationship with contractors. “The ease of dealing with the Greensill system has been a big benefit to my business and it has helped me to grow and expand — not just sub-contractors but pay-as-you-go staff as well.”
Today, Greensill’s SCF products are being used by eight million customers and suppliers around the world just like CCC to help liberate trillions of dollars of capital locked up in unpaid and late bills.
There are good reasons why SCF has become more popular and widely used. It provides finance at the best rates in Australia, is technologically advanced and easy to use.
Under an SCF program a supplier can elect to receive early payment of their invoices from Greensill at ultra low rates rather than waiting for payment on normal terms or borrowing to bridge the gap. Greensill pays the supplier immediately and is paid back by the buyer at an agreed date in the future.
Importantly the service is entirely voluntary. A supplier can choose to be paid on normal terms or it can receive early payment. The growth in the industry highlights that many are choosing the latter.
By giving SMEs the option for faster payment, Greensill is making finance fairer for all.