Australia has the dubious distinction of being one of the world’s worst offenders when it comes to late payment of invoices.
It an issue that’s critical to small businesses, with one in five saying they’d face closure if they had to deal with a late payment.
The Business Council of Australia recently introduced a voluntary code to encourage prompt and on-time payment to small businesses, with more than 30 companies signing up.
“This is a good thing,” Small Business Ombudsman Kate Carnell told the EOFY forum. “But in the inquiry we did recently into payment times, we found an increasing number of large, particularly multi-national businesses, were going 90 – 120 days as standard payment time.”
Peter Strong, the CEO of the Council of Small Business, warned late-payers could soon be publicly named.
Small business owners share their stories. Source: Supplied
“A whole range of awful things happen when you look at your staff and you can’t pay them, and it comes from the fact that these big businesses haven’t paid their bills.”
Australia, franchising friendly?
According to the Franchising Council of Australia, our nation is one of the franchising super powers of the world.
“1 in 10 dollars in our economy is generated through a franchise,” the council’s CEO, Bruce Billson, told the forum. “Three out of four start-ups aren’t with us within five years. In franchising three out of four are still going strong because you get the benefits of the wisdom of others… that’s why it’s popular.”
One prominent business that’s gone down the franchising route is Mark Bouris’ wealth management firm, Yellow Brick Road.
Initially YBR tried out a licensing arrangement, before switching to a franchise model.
“The main reason we went into a licensing arrangement before we went into franchising was to try and move the overheads from the head office out into the branch,” he explained. “But over time our branches said look, we don’t really have enough comfort about that… So we decided to turn them all into franchises. And the franchise moniker has government protections, legislative protection… it’s just has a better way of developing goodwill.”
The audience at the Small Business Secrets - End of Financial Year forum. Source: Supplied
But restaurateur Nahji Chu wasn’t convinced.
“I wouldn’t move into [a franchise model]. I think the population of Australia is far too small for a franchise model in fast food. I’ve seen too many franchises failing in the fast food industry in Australia, for example Pie Face… I think franchise law is a quagmire of law and litigation and red tape. So the short answer is no.”
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