If you are a Corporate, or Financier offering Supplier Finance to suppliers in Australia - please read on.
The Australian Small Business and Family Enterprise Office (ASBFEO) has just completed its initial review of the impact of SCF (Supplier Finance) on small Australian suppliers. Whilst ASBFEO recognized the benefits of such programs where they were used to support prompt payment against current 30-day terms, payment terms beyond this were deemed to have negative impacts on small business. They further explained their concerns related to AI-driven, dynamic discount rates, which were targeting the greatest return possible from small suppliers, and recommended the ACCC (Australian Competition Law), Treasury and ASIC should further review. ASBFEO is seeking further comments, up until the 28th of February of 2020, at which time they will commence preparation of their final report.
Recommendations to impact global & local providers of Supplier Finance
The ASBFEO recommended the enforcement of payment terms of 30 days or less, with Supplier Finance, used to enable an early payment against "current" 30 days terms. They called for appropriate coverage of accounting standards for buyers’ balance sheet treatment and are seeking review from the ACCC, Treasury and ASIC. The ACCC to review from an Australian Competition Law viewpoint, including how data is applied through AI and algorithms & Treasury and ASIC to review whether supplier finance should be a regulated financial product with coverage or rate setting.
It is not too late to give feedback
The ASBFEO is seeking comments on the draft recommendations (https://www.asbfeo.gov.au/sites/default/files/documents/ASBFEO-SCF-position-paper.pdf ) by Friday the 28th of February 2020. With final recommendations shortly thereafter.
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