The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says large companies using supply chain finance products that mine big data to manipulate small business suppliers, are on notice that this practice is being examined closely as part of the Ombudsman’s Review of Supply Chain Financing.
“Recent reports of big businesses using supply chain finance platforms that use artificial intelligence to calculate the discount a supplier may be willing to accept, are disturbing,” Ms Carnell says.
“These types of reverse factoring products that vary based on how desperate the supplier is, are being closely looked at as part of our ongoing Supply Chain Financing Review.
“Small businesses have raised their concerns with my office about the use of artificial intelligence and big data to determine and target discounts.
“It’s clearly not OK for big businesses to use their dominant position and access to technology to further squeeze small business margins.
“Unfortunately the only way to level the playing field is through further regulation and legislation, which means more red tape.
“Supply chain finance can be a legitimate and effective tool to free-up cash flow for small and family businesses.
“However, it should never ever be a replacement for reasonable payment terms being offered, 30 days or less from invoice.
“It is imperative small businesses are paid on time. We know that late payments equate to a $7 billion drag on the economy.”
Since the Review launch in November 2019, a wide-ranging consultation process has been underway with large businesses, small businesses, and supply chain finance providers.
Small businesses and family enterprises who have had experience with supply chain financing can still contribute to the Ombudsman’s review via [email protected]
An interim report is expected to be released by the Ombudsman in March, followed by a full report by the end of April.
