www.i-grafix.com, 25 July 2013
Print businesses are backing the Australian government’s new drive to get businesses paying their bills to each other within 30 days.
The government is calling on businesses to share their views on the proposed introduction of a Prompt Payment Protocol in Australia, which aims to help strengthen small business payment terms, cash flow and businesses to business relationships.
Printers have until August 23 to make their submissions to the discussion, go to www.innovation.gov.au
If implemented the move would help printers, who currently suffer a 12 day cash flow lag. A recent Printing Industry Trend Survey Report showed that respondents paid suppliers in forty days, but take up to fifty-two days to collect their debts.
Liquidated Melbourne printer Pageset’s owner John Della pointed the finger at bad debts and a harsh trading environment as the reasons for Pageset’s demise. He was left with a $130,000 hole when BPA sank three months ago, which compounded an already burgeoning number of bad debts.
Bernie Hockings, director, G2 Solutions and president of the LIA told Australian Printer, “I am a strong supporter of this initiative. Cash flow is the life blood of companies both big and small and is vital to ensure long term survival of our industry. We have all seen the damage done to businesses that have been caught out when companies have folded owing them thousands of dollars on overdue accounts. A more respectful and honest business to business relationship can never be a bad thing. I think it is a great idea to acknowledge the many upstanding companies who have consistently done the right thing.
Peter Musarra, co-owner, Carbon8 told Australian Printer, “I fully support the government’s proposed introduction of a Prompt Payment Protocol. It is sad to see how many businesses have fallen in the last few months. The 30 day term is perfect and should not be stretched.”
The Government has undertaken initial consultation with a range of key stakeholders, including peak industry and small business groups, financial providers, individual companies and within government.
Helen Stewart, general manager, Evolve Printing says it is not realistic. She says, “Our best payers are small and medium companies anyway – it’s the big corporate companies that pay when they want to. We are at their mercy when they pay us.”
She says, “In an ideal world it would be wonderful but I don’t see it happening – I can’t see the corporate and big companies accepting these terms at all. And who would monitor it? It would be a bit like our superannuation schemes.”
Bernie Hockings though has another view, he says, “It is realistic. With the instant payment methods we now have at our disposal such as internet, b-pay, even transfers from your smart phone, the traditional thirty day account is now completely behind the times.”
Hockings says, “With small business making up over ninety per cent of all Australian business and employing millions of people any improvement would be a good thing for our economic outlook. When you buy items on ebay or fuel at the petrol station you expect to pay immediately or use a credit card to give you payment flexibility. You don’t expect the company providing the goods or services to bankroll the arrangement.”
Hockings says it will in time benefit his business as long as enough businesses get on board. “On the whole, our client base is very good at keeping within terms and when they aren’t we chase it up immediately. If we could just rely on everyone to do the right thing, then all businesses, not just ours would save thousands of hours currently wasted on chasing slow payments.”
Stewart says it will benefit her business greatly if payments were on time. “We wouldn’t have as much of a cash-flow crisis and we could pay our creditors on time.”
She concludes that big companies/corporations would just go to printers that were prepared to wait for payments between 60 and 90 days from invoice date, which would harm the smaller companies even more.
Keith Ferrel from Cactus Printing says like most other Kevin Rudd initiatives he doesn’t see how it will work but anything that can speed up payments would be a good thing.
Ferrel says, “My experience suggests that the larger the client/company, the longer they take to pay. Most advertising agencies for example take sixty to ninety days. I don’t see a message coming from the government improving that, even the work that we produce for the government, payments range from thirty to ninety days.
“If payments are prompt and realistic I am sure it would benefit everyone’s cash flows and that can only lead to a more stable and secure business,” concludes Ferrel.
Neil Collyer, CEO, Fineline Printing told Australian Printer, “In this tough economic climate cash flows are impacting on every small business. The Prompt Payment Protocol is certainly an initiative that should be applauded but as to whether it gains much traction is debatable. There is definitely an imbalance in bargaining power when small to medium printers are faced with the quandary of pursuing old debt with large or their most important clients for fear of jeopardising the relationship they have with those clients and future spends.”
“In an ideal world the proposed ‘play fair and pay on time’ protocol has merit but one has to be realistic and understanding of the pressures all businesses are currently facing,” concludes Collyer.
Speaking to Australian Printer, Rodney Frost, CEO of Cheque-Mates says, “The pertinent question is how realistic is it. For someone to pay earlier they actually need to have the cash, to get the cash they need people to pay them faster, and so on. It ends up with the generator of the cash and in a lot of cases the consumer to spend more and faster.”
“Is it realistic that everyone pays all money owed to thirty days (for example) all at once on the same day? I wish them all of the best with getting this in action,” concludes Frost.
The principles of the protocol are to: Pay on time; Communicate clearly; Encourage good business relationships; Adopt a compliant resolutions process; Identify yourself as a Prompt Payment Leader.
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