At C2FO, we believe that transparency and trust are crucial to the efficient funding and operation of any supply chain. Our goal as a provider of working capital solutions is to help companies of all sizes gain greater control of their cash flow.
That’s why we’re concerned about recent news reports in Australia outlining the improper use of supply chain financing by a small group of enterprises toward their suppliers. The alleged tactics have included unilaterally extended terms, untimely payments and aggressive, misleading marketing of SCF programs.
As a leading working capital resource for companies in Australia and throughout the world, we at C2FO feel the need to state our position on these practices, which we believe are not only improper, but are harmful to the Australian economy and why we have strict policies in place to prevent such activity through the C2FO platform.
Small and mid-sized enterprises are the lifeblood of any thriving economy, which is why C2FO’s mission since our inception more than a decade ago has been to deliver a future where every company in the world has the capital they need to grow.
It’s because of this mission that we are committed to doing more for the future of SMEs in Australia. Specifically, C2FO is working to provide the following:
C2FO is collaborating with our Australian corporate customers to standardise all their SME payment terms to a minimum of 30 days (20 days where possible). This is consistent with the recommendations in the February 2020 position paper from Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman, in which she described 30 days as “good payment terms.”
From our experience in serving companies around the world, we know that this initiative will need to be coupled with an optional early payment program for SMEs to access when they need it, as even with 30-day terms, many companies will at times require quicker access to their capital. This issue is particularly acute in Australia with the banking sector unable/unwilling to provide credit to small businesses quickly and/or easily, which is why a best practice-based early payment finance model (provided at a better-than-market rate to SMEs), is both valuable and required in the Australian economy.
At C2FO we also know that many SMEs manage their financial position extremely well. That is why we have improved our platform to enable financially strong SME suppliers to voluntarily receive a delayed payment on their invoices—in return for being paid a small premium on those invoices.
This model completely puts the power in the supplier’s hands on payment term extensions. Specifically, a corporation does not need to “push terms” to get working capital into its business. Instead it can achieve this by simply accepting the proactive offer(s) made by its supplier SMEs. For SMEs this innovation represents a potential new income stream because they can be paid more on an invoice that’s already issued. We call this new feature ARx.
We believe it is this type of innovation that will drive equity into the relationships between large and small companies. At C2FO, we are driven to making a fundamental positive difference in the way business is conducted in Australia and are working to deliver this change through a thoughtful and ethical approach that helps companies take control of their capital.